From the point of view of England those policies were very good. It's hard to imagine from an English point of view that a Spanish conquest, and imposition of the Inquisition would be good for them. All the nations in Europe have attacked each other at one time or another so, what is your point? That the English don't see themselves as villains seems hardly strange. Spain wasn't an innocent victim of English aggression in the 16th & 17th Centuries. During the reigns of Charles V & Phillip II Spain was fighting for European hegemony, is it any wonder that England, France, and other powers were resisting?
The Reformation strengthened the monarchies of Europe and helped create the modern Nation State. The Catholic Nations benefited from the Counter Reformation as well. England being conquered by Spain would've set the development of the country back by generations.
It's funny that you say that when England already had its own Inquisition, so at most it could happen that the leadership is changed and they go on to persecute Protestants, but that would be all the change.
As for the "fight for European hegemony" this sounds more like a projection of British paranoia about the hypothetical European hegemony, even if we consider that it is true that the countries of Europe were constantly fighting for reasons that today we would consider stupid.
What I find extremely dubious is that Manichean framing of the conflict "the good non-Spanish powers against the evil Spain that wants to end it all" when a more realistic description would be "everyone wanted to be the one on top and they were fighting for it".
I would like you to please expand your argument about how exactly the Protestant Reformation benefited other countries. Especially if we consider that the centralization of power was already a trend even before the Reform (so it cannot be said that there is a direct correlation between the two).
Unless, of course, it is considered to be beneficial in some way to plunge virtually all of Europe into bloody civil conflicts, which completely destroyed the local economy* and degenerated into a thirty-year war whose casus belli can be summed up as "WE WENT TO KILL THEM ALL WHO DOES NOT PRAYS LIKE US".
In particular the idea that "Spain conquering England would have forced her back for generations" sounds more like a black legend than anything based on facts, because nobody wrote in stone that OTL was "destined to happen".
*I quote the economics only because many people seem to believe that it is the only relevant factor worth considering.