Some viewpoints:
"Aborting" the launch.
Once the "button" is pressed to launch, the Shuttle is committed to continue until the SRBs are jettisoned. Once these have gone, there are various "options" - however, all are hazardous. There is RTLS (Return to Launch Site) - however, I believe this has a significant chance of ending up in the sea. There is "abort to Africa" - I think this happens with 2 engines lost - again, hazardous. Then there are the safer ATO - Abort to Orbit e.g. for 1 orbit - however, this will involve a reentry. There has, I believe, been 1 abort to date for an engine failure - however, it was the mildest option, and left the shuttle in a lower than desired orbit.
I think you will find that very rarely are the Crew / Mission Control going to "call" an Abort - in practice they will be "forced" into one of the above options by onboard engine failure(s).
<<There have been suggestions that an EVA was not possible>>
Yes - the kit was not on board, nor had the training been carried out for this crew's mission.
<< that the underside of Columbia was not able to be viewed>>
Exactly - there is no mechanism, except EVA. Even the arm, when carried (it was not here) cannot "see under". I have to ask the question - if they saw damage what were they going to do?
<< and that there was no possibility of a dock with ISS.>>
A massive loss of flexibility if this is to be required. It takes a hell of a lot of energy to get into orbit. To now decide you want a different orbit is not like changing lanes on a motorway - it is like needing most of the energy supply you had at launch at your disposal again. Note when they have problems how tight the launch windows are if some rendevous if required.
<< Let's hope future missions can incorporate some flexibility on such issues.>>
I doubt it - the loss of flexibility and increase in costs would make an already dubious machine financially absolutely useless.
If you want to go down this route, I think the only way to do so is to seriously look at whether the work done by the shuttle needs to manned spacecraft. It comes down to one's moral judgements - all viewpoints of which have to be respected.
Personally, looking at the slim margins and design fundamentals of the shuttle, 2 losses in over 100 missions is probably par for the course, if not better than expected. There have been a number of VERY close shaves, and all of these are still Criticality 1 items - if they happen = total loss.
NoD