The Vilna Gaon was the leading adversary of Chassidism. The Vilna Gaon was probably the greatest scholar of the past thousand years or more, no one argues about that. Many of his contemporaries who agreed with
him were also great scholars. And they had many many debates and proofs that Chasidism as they derisively called it, was definitely a heretical movement.
At some point in history, things changed. I'm not sure the precise moment that the change happened, and I'm not sure of the exact issue or issues that caused a lot of folks to change their minds. And I'm sure that
there were still "old school" misnagdim who were scratching their heads and wondering "Where have we gone so far off the derech to be so accepting of the heretical Chasidim? All of the leading Rabbi's of the previous
generation ruled that Chasidim were heretical!"
Was the Vilna Gaon wrong? Well, I think the consensus view is that he was not really wrong, but he was right only within a certain context and time period. He was a great scholar who called them as he saw them, and
understandably so during the time in which he lived which was soon after Shabtai Tzvi and the evil tidings he brought on. Yet, with all due respect, he was not a Prophet to know how things actually have evolved.
I think that one can certainly be against the Israeli government for any number of reasons. However, those scholars of the previous generation who held that such a government's existance would lead to a national kefira in terms of influencing religious Jews to drop the Torah in general, or at least to get them to deny the coming of Mashiach, viewing the present government to be a substitute, have largely been proven to be incorrect. Like the Vilna Gaon, they were great scholars, but they were not neviim. As such, with all due respect, the prophetic aspects of their proclamations about what would happen in the future should such a government be permitted to take power, have largely not materialized. For in spite of any negative influence of such a government, the fact is that since the inception of the state in 1948, Yeshiva's and shul's and learning institutions and chesed foundations have sprouted up all over the country. And, although I can't prove any statistics, I would venture to bet that there is nary a religious Israeli who views the Israeli knesset as a
substitute for the coming of Mashiach. And quite a few have plenty of contempt for many aspects of that government.
And this is perhaps one reason why many contemporary Rabbi's have changed their views, at least somewhat, in these matters. As they now see with their own eyes that all the fears of the evil to come has evolved into many more Yeshivas and Shuls and other religious institutions that were not and are not negatively influenced in terms of "kefira" by the existance of an Israeli government. Were these Yeshiva's that sprouted up forced by the government to inculcate into their educational system that Israeli secularism is superior to Torah? No. Were shul's that sprouted up forced to change the prayer books to some newfangled secular Israeli doctorine? No. Not yet anyway.
The reason that some rabbis have changed their minds about the state may be along the lines of what you said, but that is only symptomatic of the fact that earlier rabbis did not always make clear the reasons why a state is forbidden. They spoke of the sins of the Zionists and the threat they posed to religious observance and Torah study, but they did not speak enough of the sin of Zionism itself. It's not just a fear that people would view the government as a substitute for moshiach; it's that in essence that is what it is, no matter how you try to portray it.
Some chareidi supporters of the Zionist state claim, "We're not Zionists. We don't see this as the beginning of the redemption. We see this as just another stage in exile." The problem with this is that you can't just do one thing and call it another. There is simply no precedent throughout the Jewish exile for a Jewish state in Eretz Yisroel, independent, more powerful than most other countries in the world, with almost half the world's Jewish population living in it. It's not exile, even if you call it exile. Imagine if they would build the Temple too, offer all the sacrifices, have a totally religious state, and then say, "This is just exile, we're still waiting for moshiach." Exactly what would they be waiting for moshiach to do?
Some people argue: the State of Israel cannot have any connection with redemption. It is simply another stage of exile. So why is it forbidden? The Three Oaths only forbid efforts to bring the redemption before the proper time. But this is not redemption - it cannot be, since moshiach is not yet here.
According to this logic, the Three Oaths are meaningless, because there is no way for us to transgress them. Whatever we do before moshiach comes is automatically defined as part of exile, and thus not a violation of the oaths.
Let me give you an analogy: A family had a beautiful table, covered with the finest dishes and food. A prophet came and said, "You have sinned, and Hashem is taking away the table. You are forbidden to have a table until Hashem gives it back, and He will not give it back until you repent." The table is then taken away. The family promptly goes out and buys a new table and dishes, saying, "Hashem said He wouldn't let us have the table back until we repent. We didn't repent, so this cannot be a table. It is just a piece of wood on four legs. So we are not violating the command of the prophet."
Another analogy: The Gemara says in Avodah Zarah 55a that sometimes worshipping idols seems to be effective. People go to the idol lame, and come back walking. When there is a drought, they worship the idol and rain comes. The Gemara gives two explanations for this: 1) The sickness or the drought just happened to go away at the same moment that the person worshipped the idol. 2) Hashem gives idol worshippers a chance to slip, in accordance with the principle that he who tries to defile himself is given opportunity to do so.
Once a Jew saw his non-Jewish neighbor go to his temple of idolatry when sick, and come back healed. The Jew then went through the following logical steps: The Rambam says in his Thirteen Principles of Faith that it is only worth praying to Hashem, and it is not worth praying to anything else. This non-Jew got healed, so it must be that what he prayed to was Hashem, not an idol. So I will go and worship it too.
His Jewish friends were shocked to see him going to the temple of idolatry, and said to him, "How could a good Jew like you have suddenly become an idol worshipper?" He replied, "Chas veshalom. I am praying only to Hashem. You are all heretics. How could you not believe that the idol is Hashem? The Rambam rules explicitly that it is. He says that idols do not answer prayers, only Hashem does. If this idol answers prayers, it must be Hashem!" They tried to explain to him that sometimes Hashem helps people to go astray in the path they want to take, as the Gemara says in Avodah Zarah, but he replied, "You cannot rule halacha from an Aggadta Gemara. Anyone can find a Chazal to support anything. But I have an explicit ruling of the Rambam on my side."
The moral of both these stories is the same: you cannot do one thing and call it another. A table is a table and an idol is an idol. Similarly, Jews have always believed that only moshiach will gather the exiles, bring Eretz Yisroel under Jewish control and set up a government there. You cannot do all these things before moshiach and then call it exile based on the argument that by definition, any situation before moshiach's coming is exile.