I can't really say i know too much about Portigal's involvement, That was arguably the darkest period in modern history. Strong feelings will never be far away.
People often talk about the aftermath of World War I being nasty with the German reparations and whatnot. One major misconception that people have is just how messed up everyone was after World War II. So it's to be expected that there will be a bit of handbags in there.
The flag being at half-mast on his death was not great, but as you say, how is it the fault of the country's third generation in passing if a dictator is in charge?
I think you are right.
Just look at Germany for instance. It was obviously a messed up country in the early 1900s, but now they are one of the leading lights in the world. History should never have a bearing on a country's image, if measures have been taken to change matters.
But one thing I will say is that history of this kind can be misinterpreted very easily, and it's obviously very vivid and not at all pleasant. People will have strong opinions, that you don't want to get in the way of.
He can have whatever opinion he wants to as far as I am concerned. But to go to this ceremony, one handled by a prestigious and giving institution, where media was present, and say this? He has got be a huge jerk (mind you, that is not the first word that came to mind).