BastOn
The point you raise on competant DR rather depends upon how critical the position is - neither DR nor the SuperTANS should have been relied upon to get as close in as the position of waypoint change while still at speed and closing with the fuzzy coast.
Either would have been ok if they were just route flying by the Mull – the sea crossing was not that far – but they would have had to allow a margin for error a lot more than the few hundred yards that was between waypoint change and the nearest coast (remember the oblique angle of approach).
It seems unlikely in the extreme that they had had control problems before the position of waypoint change or they wouldn't have bothered with the change and anyway if they had any sort of problems it would not have made sense to dump the one reference point in the nav system that would have been of use to them.
They were either incompetant or they had a reason to approach the coast so closely and with a method in which they had confidence.