Was Operation Mercury on Crete a fatal mistake by Hitler?

Answer 1

Actually Hitler was opposed to this operation. He, rightly, felt that his airborne forces should be employed (with Italian airborne) on Malta. Gen. Student, among others, convinced Hitler that the island was a: weakly defended and b: the population was pro-German.
Operationally, the plan to scatter the initial drop to secure airfields was a poor one. Especially given the lack of real order of battle intelligence (This is how many of the enemy, their organization and equipment) the Germans had. Prudence would suggest concentrating drops on the West side of the Island near say Xania or Kastelli. Secure an airfield, then once consolidated, under air cover advance eastward. Had the Commonwealth forces been better led, Crete would've been an Allied victory no doubt. What was truly fatal, was Hitler's decision not to use his airborne forces en masse in the future. There were several instances in Russia or even maybe N. Africa (Malta?) were a division level drop might have been decisive.

Answer 2

Maybe not fatal, but it did show the allies that airborn assaults worked and set them to work building their own paratrooper forces.