Seems reasonable from an "evil authoritarian" perspective. Make a show of trying people for spying (but don't actually convict anyone!) for the public, and then really punish the person who blew the cover on the operation.

I guess the conclusion they only did legal spying, and that any errors where accidental and not systematic breaches of the law so it was ok? Don't know what the commission concluded (most details are probably secret anyway).

Yes.