I don't get how the Uchiha massacre was a mistake? It was the only way out of that situation with the least amount of casualties. If the Uchiha carried out their plan they would have all died anyway and taken a lot of lives of the leaf village and stain their name for history. Instead, only one member, Itachi, looks bad and less people died. Well madara now too looks bad.
IMO Hiruzen was kidding himself if he thought he could talk it out.
The massacre was a mistake because it led to Sasuke, who, even if is ultimately not successful in his vengeance, became an enormous risk.
Plus, peacemaking attempts were still undergoing when Danzō orchestrated the massacre. One could argue it was a preemptive move for the greater good of the village, but seeing how Danzō turned out to be nothing but a power hungry cunt, I'd argue it was a premature response to a situation that not yet escalated to a point to warrant the extermination of another entire clan, including mere civilians that posed no threat whatsoever. I believe Danzō had other interests in mind and his this ulterior motive. Remember, this dude used to work with Hanzō (who, in part, led to the creation of Pain),
and Obito alluded to the possibility he had a hand in the invasion of Konoha during the Chūnin Exams.
It seems to me Danzō was just a sly old warmonger that would do whatever necessary to further his own interests and justified that with flowery language expressing how he supposedly did everything for Konoha. To this end he
- recruited orphans to do his dirty work after taking away their identities and branding them with his own cursed seal to silence them
- had his operatives take each other out when he no longer had any use for them
- stole Shisui's eye and drove him to kill himself
- had the entire Uchiha clan exterminated when diplomatic solutions had yet to be exhausted
- killed Kōsuke to prevent him from recalling Naruto earlier
- held back his Root operatives from assisting during Pain's attack
- manipulated and used others by using Shisui's eye and arm, as well as they eyes he pilfered off the remains of the Uchiha clansmen that were murdered by Itachi and Obito
- had dealings with Orochimaru (likely for the Mokuton implant), and Obito (though this was never truly elaborated upon)
That's just the stuff I can remember from the top of my head.
In the end Danzō was just a cunt, plain and simple, and his death was far to good for him.