Would there be more heroin use if it were legal? Some say yes the availability would ensure that, some say no the drug would lose the mystery and glamour of being illegal.
Do we criminalise a drug to protect the users, the pending users or society?
Obviously existing users may get more if it were legalised, but how much do they need? Is it the drug or what they have to do to get the drug that destroys their lives? Obviously those who live decades using methadone under present policies show they only need enough to mitigate withdrawal. Pending users may get heroin and become addicts where a lack of ready availability may prevent them doing so, but is the drug available enough now to experiment? Obviously yes. However society would benefit from less crime and the big producers would be dissuaded from producing by the collapse of market prices.
Yes of course the purity is a factor in overdose and poisoning because dope cut with poisonous substances kills many experienced users. Impurities may not cause addiction but they do cause deaths. Try a shot of heroin laced with drain cleaner if you don't believe me.
As for disfunction caused by addiction, well that is irrelevant compared with disfunction caused by the activities necessary to support a habit. Any substance abuse causes disfunction and that includes alcohol and petrol even ciggies require numerous trips to the sidewalk day in day out.
You said: "Your second question is really a foolish one in light of the damaging effects of heroin. One young lady known to me ,since deceased, was spending up to $3000 per week on drugs including heroin and had to scrouge money for rent and food" Well I bet she did more than scrounging and what killed her finally? Not medical quality dope that's for sure. She could be alive today and taking controlled doses or having kicked the habit if she had the will to do so.
You said: "With heroin it's a game of diminishing returns in terms of the user, so the cheaper the drug the more they will use" That may be true or it may be true only up to a point but fewer would die.