It's right to identify a Howard '97 leadership as certainly not being a modernisation-orientated leadership, but I completely disagree with you on him being worse or less grounded than Hague. Hague tried modernisation in his first few months, tried it utterly cack-handedly (Baseball cap, going to carnivals, etc) gave up pretty much before '98 had dawned, tried about a hundred vague (Actually one of his nicknames around 1999 or so) 're-launches' of the party, gave up on that, in fact gave up on any sense of leadership at all and swung wildly to the right towards the end of the Parliament. This ended with the Tories going into 2001 with basically two policies - keep the pound (Threre was never any risk of it being given up without the British electorate's say-so by that point) and stop Britain becoming a 'foreign land'. The rest, in so far as it existed at all, was a dog's breakfast of contradictions (slash taxes, raise public spending - I remember even us, as seventeen year-old politics students, taking the piss out of this at the time) born of Hague trying to appease both Portillo and the right simultaneously in the shadow cabinet. Irrespective of any ideological prejudice a person brings to the analysis, Hague was in short an incredibly weak leader.
It is very hard to believe that Howard would make such a horrible mess of that Parliament as Hague did, or go further to the right than Hague eventually did, which was, let's put it in perspective, probably one of if not the most right-wing platform the Tory party has fought on. He already had established kudos with the right for the reasons you identify, so likely wouldn't feel the need to stomp about for appreciation from them, and was a cannier operator than Hague. I get the sense that his 2005 Lynton Crosby-inspired strategy was as much a hold-up operation born of his truncated leadership (Howard was leader for all of about two years, it's worth bearing in mind) as it was genuine Howard by that point. It's hard to believe, certainly, that Howard in his heart of hearts went from believing firmly in replicating a comfort zone strategy to being the godfather of modernisation (It was his promotion of Cameron and Osborne to the shadow cabinet after the election that gave them the stature to take over the party - and Howard was fully conscious of what he was doing in that respect) all in the space of a few months.
This of course was after three election defeats, two very heavily. You had to be a very dim or ideologically blinkered Tory by 2003 not to realise that the future lay away from the strategies that had been pursued in opposition to that point. Viewpoints had been modified by all, and doubtless Howard's were to a fair extent. But an alt-Howard doing worse than Hague in the '97 Parliament I don't see. To my mind A more stable, less insecure leadership (if not neccessarily a hugely more moderate one) can only reap some small electoral reward. (And I am thinking small - up to 180-200 seats, max. A net gain of fifteen or twenty seats should not be a big ask in 2001 to any Tory leadership that is not actively ruinous to its own cause. There were a fair few seats that Labour should not have realistically been expected to hold for more than a Parliament that they did hold until 2005.)