He was very clearly a 1st pair defenseman when used properly on a Stanley Cup winning team. And I know people love to use Cale Makar as the reason for his success, but he was damn good on his own merit. But he also improved his game on the Avalanche. Lou likely viewed Toews as a 2nd pair guy. It's still inexcusable he dealt a cheap 2nd pair defenseman for peanuts while keeping Leddy. The way the two players were used implies strongly that they valued Leddy more. That's just bad player evaluation. Whether it be be Trotz or Lou, or both.
"Used properly" suggests there was some sort of situation where Toews would've been more effective with the Islanders than he ended up being but that isn't true. The NHL is riddled with guys who played second fiddle on the first pair because the guy they were paired with was extraordinary. That's the case for Toews and Makar. Without Makar, Toews isn't a top pair defenseman and/or would be significantly less effective there. The Islanders don't have a Makar, and neither do most teams, so there wasn't a situation for the team to use him "properly."
You said earlier that "his contract was only 4 mil x 3 years, you find any way you can to keep him. That means trading significant assets to move bad contracts. The issue isn't that he moved him. The issue is that he did not know how good Toews actually was. He completely misunderstood how valuable of a piece he was and how he offered the puck moving ability nobody else (including Leddy) on the team."
What is fair value for a top pairing defenseman who isn't the main piece of the top pair? What would you have wanted to see the Islanders get in return? You're also speculating that they didn't know how good Toews was but as I mentioned earlier, that proper scenario you're dreaming about didn't exist for the Islanders. Maybe the evaluation was done based off fit for the team instead of the perfect scenario.
What are we okay giving up for Toews? Leddy + 2 second rounders (and I think that's being generous)? One of the picks gotten from the Toews trade were used to offload Ladd, along with another second rounder. How are they moving on from Ladd to create cap room if they spent those assets getting rid of Leddy instead? It's likely they can't afford to do that deal and are stuck with Ladd's cap hit.
In order to keep a player who didn't play top pairing minutes for the Islanders, you gave up Leddy, picks, and had to keep Ladd, all while your cap situation is still a mess. I'd have preferred to keep Toews over Leddy, I think he's a better player, but this isn't some criminal mishandling of the situation like you're suggesting.