First, I can't argue with your exposition of the PCF or any euro-Communist parties at the time. It would be helpful if you knew some source that might give more history of them. I have a hard enough time figuring out the Anglo-American events (especially the ones that most on this list assume we all lived through. I was born the day after Carter was elected in the US so have a lot of catching up to do.)
Second, I maintain that you are not giving the ideas their due. I appreciate your putting them into the context of the history of French and European politics, but you seem to be ignoring their place in the history of ideas. "Contradiction and Overdetermination" is by no means the only thing he ever wrote and, while it's been a while since I read it, on the whole, I don't think it all that bad of an essay describing the problems with understanding the Russian Revolution and revolutionary politics in general. I think it would take a pretty lazy activist to read it as a reason to give up the fight entirely.
On that count, how is Althusser worse than, say, Marcuse at the level of ideas? The "One-Dimensional Man" is hardly a charming inspiration to human agency. Or is the distinction we must make between the fact that Althusser had similar ideas but didn't work with student groups espousing them? Come to think of it, if Althusser's ideas were so depoliticizing, why were his ex-students the ones fighting in the streets?
Third, I don't get what the argument would have been about with his wife in 1980. Was the PCF even around then? And what strikes were going on which he wasn't involved in? Is it possible that this is a misrecollection? He was, after all, in a mental institution?
All of this is getting very muddy and quite far away from whether, for instance, the epistemological critiques in Reading Capital were useful for the 1960s left or critical thinking in general. I maintain that they were important and that it was more their abandonment in favor of Laclau and Mouffe, Derrida, and other post-marxists that led to the depoliticization of the Left (even if they were useful for thinking about other kinds of struggles.) The Trotskist (your designation from earlier) Norman Geras said as much in his review of their book back in 1987.
http://www.newleftreview.org/?page=article&view=509.
Since Althusser is now only rarely read--though I'm sensing he's making a comeback on this and other lists--I'd say it was more this later movement that helped depoliticize the left.
For the record, on the Marxist Literary Group list a few weeks ago, the argument about Althusser was whether we should read him (or anyone he influenced) because he believed Khrushchev's denunciation of Stalin--therefore positioning himself against Stalin and the PCF--now that, according to the poster who has made it his pet project, it has been proven that Khrushchev was lying about said crimes. In other words, should Althusser be denounced because he was insufficiently loyal to Stalin and the PCF. So I guess these sorts of argument make the rounds.
s