This is more a general response than particular to the Dean comment/denial/whatever.
I’m not convinced (As I know others are) that the ends, in general, do not justify the means. In a perfect world, then yes, this would hold as people would be indifferent to personal animosities or political partisanship. However, we do not live in that kind of world.
If, to use your hypothetical, Bush knew that Saddam was on the brink of creating a nuclear weapon which he would then use against the US or in a manner that would draw the US into a much greater conflict, then I feel he would be correct in usin a wide variety of means to get the necessary support for war. I have no doubt that if he brought his case to the American people there would be a substantial number of democrat partisans (as there would be republican partisans if Gore were president) who would deny the validity of the information, the need for war, or any thing else they could think of to undermine the effort. At this point, there is a power struggle, delaying the effective launch of operations until a point at which it may be too late to avoid serious complications: a nuclear blast in New York City, battlefield WMDs used against our troops, etc.
The question of partisanship bogging down the open and free exchange of ideas is self-evident within the OP. Safire is either genuinely mis-reading Dean’s quote or intentionally attempting to mislead others about it for partisan political ends - namely to undercut a potential presidential candidate from the other party.
Certainly, it is not always a case that the ends do justify the means. The ends must be of a substantially great enough nature and the ends certainly must fall within some bounds. This complicates matters, but in a practical world there are no clear-cut yes or no questions (at least not of any significance). It is therefore more instructive perhaps not to ask whether the ends justify the means generally, but whether a specific set of means are justified by the end to which they are applied.
So, we are left to ask the following questions. What means did Bush use that are distasteful? What was the end to which he applied these means? Is that end of sufficient enough worth to validate the use of questionable means? Did he cross a line over which no one can be forgiven their transgressions?
Here, I think we will see a large departure from the cool, collective discussion of disinterested parties and delve deep into partisan debate and bickering.
As for the questions posed in the OP, I fully believe that Safire is quite intelligent and as such is more than able to understand the nuance and meaning of Dean’s statements. However, I am unsure at this point if his partisanship is clouding his judgment as to what Dean really means or if he is maliciously mis-representing what was said. As for this (registered, but displeased) Republican, I think the OP has the sense of Dean’s comment much more so than Safire.