Thompson is very replaceable on both ends of the court, and with Iguodala, they don't really even need a second lock down defender starting. Kevin Martin would be a better offensive player than Klay, and they could pick up somebody like Aminu of the trash heap to give them a better defensive player than Thompson. They would have to be choosier with matchups, but the combo of somebody like Martin and Aminu (or even Green who is already on the roster) gives them 80% of what Thompson brings, while Love is twice the player Lee is. Its ridiculous that Thompson would hold up a Love trade from GSW's end.
Losing Klay exposes Curry defensively. Iggy is a great defender against wings but not against PGs. All of the sudden Klay is a below average defender. It's like no one watched the play off series vs LAC.
And Love is a top 5-6 player but the upgrade from Lee isn't a great as you are saying. Love is as bad, if not worse, than Lee on the defensive end, and Lee, even with his big contract was an all star solely on his offensive prowess.
I've watched enough Iggy to know he is more than capable against point guards defensively. Its great having two defenders like Iggy and Thompson, but rarely do teams face two great perimeter threats, so its more of a luxury than a necessity. With the roster they have now, if the Warriors need to try to shut down two perimeter guys, Iggy and Green are a nice tandem. With Love floating way out in the perimeter, the spacing issues wouldn't be that big of a deal, especially as Iguodala is a better shooter than his reputation.
If you think Love is worse defensively than Lee, you must not have watched Lee at any point in his career. He is the James Harden equivalent of big men, he's just embarrassingly awful.