It looks in the photo like the blades may still be pushed back a bit, though this can sometimes be attributed to cameras with a short focal length lens. If it steers fine, I wouldn't worry further about the alignment.

My only concern is the "squashed" blades, by which I assume you mean they have been deformed so that they have a thinner cross section laterally? If so, then the lateral stiffness of the forks has been compromised. If there are creases due to the "squashing", that further reduces the stiffness. I definitely would not ride any fork with creases in the blades. Hard cornering and especially riding out of the saddle could be a concern, as they place large lateral loads on the fork. Basically, the probability of a failure boils down to the amount of blade deformation and the aggressiveness of your riding style.