Why does Hiruzen think so highly of Itachi then? Why is Itachi praised by everyone who knew the truth about him?
hiruzen didnt know all the facts. when he died, all he bothered to know about the guy is that he was a good little soldier who was spying on akatsuki. yet konha apparently stopped getting any intel following hiruzens death given they didnt know shit about even who was in akatsuki let alone what their powers are.
also hiruzend didnt know that itachi could have spared them all a devastating invasion by defeating orochimaru, and chose to do nothing instead, and allowed orochimru to murder thousands of innocent people for 10 years.
he didnt know itachi had no real plan for akatsuki other than "let naruto do everything".
he didnt know itachi viciously and savagely tried to kill kakashi, tortured sasuke, and beat sasuke into a coma.
he didnt know itachi's true plans for sasuke involved brainwashing and enslavement and that he seemed to not care at all for anyones well beings. not even his own. given his death releases akatsuki from their deal to not kill everyone in konoha, he didnt care about konoha more than he cared about himself and "an end to his pain".
itachi is not praised by people who know the truth. the full truth. because no one really does except the audience. we were privy to nearly all his deeds. they werent.
sasuke called him perfect, even knowing what he did. but sasuke is an unstable nutcase psychopath at the time so his word cannot be taken as reliable or unbiased.
everyone else really didnt know the full extent of itachis evil and selfishness. all kakashi naruto and yamato have to go on is "itachi killed his clan, on orders to stop a civil war". which i have no probelm with. they had little time and options, and danzo needed to do something fast.
my problem lies in his later torturing madness, evil deeds, murders, and hypocrisy regarding the whole "killing few to save many" belief. especially because he feels no need to expose the bastards who ordered a genocide, which was clearly morally wrong as they did not simply tell everyone the truth, and required itachi as a scapegoat to direct disapproval away from them. they knew full well they could never get away with it if it became public knowledge.