They have a fearsome reputation from Soldier of Fortune magazine, General Walker's visit in 1979, and the Rhodieboos on 4chan's /k/ board, but were they really all that effective? I mean - they lost.
I've touched on this topic here before, but essentially you're basic presumption is right: They did lose. That does not make them very effective. Like you point out, this reputation has its origins in dubious places.