> More substantively, my understanding is that while the space race turned into a PR exercise, it started out as a serious military exercise in demonstrating ICBM capabilities; "we can put a man on the moon" is more politically acceptable than "we can put a big bomb in Moscow" but it is understood just the same.

It's also important to remember that "space race == moon shot" was US PR. The USSR had the first satellite, man (and woman) in space, the first space walks, etc. Lunar landings were singled out by the US as something they could beat the Soviets to; once that was achieved, the US declared victory and mostly lost interest.

The USSR kept going, ratcheting up capabilities, which carried on all the way until their collapse. The ISS is basically a continuation of their space program (funded largely to keep soviet space/rocket/ICBM experts busy and off the open market). Whilst PR and politics undoubtedly drove the USSR's space budgets and spectacles, there did seem to some long-term thinking, both for science/engineering and more politically (e.g. outposts, potentially colonies, etc.).

In fact, trying to compete directly with the US seems to have mostly hindred the USSR's space program (e.g. the N1 moon rocket was a spectacular failure and the Buran shuttle only flew once). They got some decent engines out of it though.