Well, just to throw my two cents in, "hide controls" was often abused, imho.
I mean, as an admin one would need controls to make changes to the site. Non-admins cannot make changes and therefore would never see controls in the first place.
I think, what happens in most cases, is that folks actually give admin role to real users (heck, I do this to myself all the time). The best practice, though, would be to create separate admin users so you have to specifically log in as an admin. It is the same as having root permission on your linux box, it's really a bad idea to do everyday activities as root, you should have your everyday account and, when you need it, switch to a root user when necessary.
Damon's case demonstrates mixing the concept of "configuration" with "user preference", so previously users would have an admin-like permission to get to a configuration panel on the wrench to change which categories to use.
The better use case would be like that of the forum thread view you see on this page. As a user, I can select combined, flat or tree view for posts. This is a user preference value that affects me and me alone. Separately there is portlet configuration, behind the scenes, that an admin will use to make changes which affect all users.
So for Damon's news portlet, there would be an admin configuration page where the admin can define the categories, define how many a user can see, perhaps mark some as required... All changes which affect all users. For the user preferences, though, offer an easy to use or easy to get to form for managing user preference. Additionally this allows you to style the preference display per your site look and feel, yet leverage the default styling for the admin configuration (where admins typically do not need consistent styling for configuration).
This was a very bad UX decision on Liferay's part.
I would argue that allowing the original "toggle controls" itself was worse. It wasn't well documented and it wasn't something basic users knew how to use.
The problem, of course, is that when you talk about good UX vs bad UX, it is rarely a black and white choice and often quite subjective. As developers or admins toggle controls often made sense, but I've more than once had to explain repeatedly to BAs how to use the toggle control feature because it was not something they saw on any other website they would visit or maintain.
