There are many paths in Judaism, and at first that seems confusing. In truth, however, it's not confusing at all. It works like so.
Everything begins with the heart. It begins with love and warmth. That is the start of all things. All seeds need light and water to grow. Aggadah before halakha. Spirit of the heart before the spirit of the mind, as R' Aaron would say. If people have pure intentions or yearn to do good or come close to their fellow men or God, that is exactly where they are supposed to be and where they should begin.
From here we progress to halakha. This is the mind. What begins in the heart becomes translated to the mind, and thereby, to proper action.
The different branches of Judaism (Chasidic, Litvish, etc) are just prioritizing for different people. Chasidim focus on beginnings. Thus, they focus on the heart. Litvaks are more concerned with the ending, the halakhic dedication to God and halakhic transformation and conquering of the world. Thus it makes sense that people may begin by being very, very attracted to the works of Chasiddus even though they have no other connection to Judaism and then may end up becoming very rationalistic, Maimonidean and Litvish. This is what happens (for some people) as they grow.
Aggada and the heart are the water, soil and light that nurture the seed. The beautiful flower bloom and the exquisite petals are those of halakha. But the plant will grow strong even without it.
Thus the conflicting stories that we hear. They are not conflicting at all; they are meant for different people at different stages. Does God desire the song of the flute when the boy played it for Him on Yom Kippur? Of course, yes. That's the aggada part- the beginning- the boy coming close to God. If the boy were to be taught more and knew better, would God desire him to keep halakha and not to play musical instruments on Yom Kippur? Also yes. Not contradictions, merely different stages for different individuals.
Some people claim aggada and halakha are exactly the same; there is no distinction at all. I disagree with them. If they think so, perhaps they were just lucky enough to be born to an understanding most don't immediately possess.
It all comes down to what kind of a person you are. Are you a person who works in beginnings or in endings? Or do you perhaps excel at both? The kind of people you should be teaching depend upon your allegiance and your strength. If you excel in beginnings and have the necessary love and appreciation rooted in Chasidic thought, you should teach little children or those beginning to come close to God. If you are a Litvak to the core and halakha is in your blood, you belong with the scholars and those who already know enough to appreciate your comments. The worst thing that can happen is for the super-halakhicist to teach a classroom of beginners; he will destroy them.
I prefer beginnings; that is why I belong with the children and the ones who are curious to begin. That is because I myself am always at beginnings. Other people are better at keeping halakha and respecting it than I am. That is not to say that I don't keep it; only that it is much more difficult for me. They are the ones who will teach the ones who have learned enough to progress to that level. Those who have the necessary foundation of love and warmth can progress to loving God's law and excel at all things halakhic. Those who have been burned by the law and hate it cannot be taught that way. Carlebach stated this when he discussed the "Israeli soldiers who ate not three but five times on Yom Kippur just to show you" but who was fascinated to know Judaism was comprised of more than just laws, rules and halakha. Carlebach offered to learn R' Kook with him and the soldier was thrilled.
That's because one touches the heart first and allows the soul and heart to come close to God. Then, if the individual desires it, they come close to God through the halakha. But this is why everyone in the world who is sincerely, honestly seeking is beautiful. Because no matter what they do and how halakhically incorrect it may be, it is the idea, intention and beginning behind it that God cares about. By touching the heart one opens the mind. Thus it is necessary to love all people and not to focus on their halakhic observance. Halakha is the ending...it comes with time. It's the people who matter, more than the halakhic correctness or lack thereof of their actions.
The most frustrating thing is when people persist in seeing this as being complicated. It is the simplest thing in the world. It's what R' Akiva espouses. Love everybody first- then teach them the laws. Love them, listen to them, hear them, touch them, and then they will want to come close to God and will discover the halakha and the ways they can approach Him. But we do not begin by teaching rules and regulations. The only thing that does is disgust people and leave them feeling estranged; they are all sinners and damned, or so they think. Just love people, really love them, and let them grow. They don't have to grow the way you want them to- it doesn't matter if they never keep kosher in their whole lives! They just have to be growing close to God. All of our service is different; God will judge us on our level. I plan on visiting many of my non-religious and non-Jewish friends in their castles in heaven, and I know they will be equal to if not higher than mine. That's the Midrash in Bereshit Rabbati- Ninus the Butcher & R' Joshua ben Ulam. (Alternatively, Shmuel the Butcher, who saved the captive woman.) The butcher and the sage were seated together...God only knows which fantastic people He'll seat us next to! Thus we must love everyone; it's only practical. The person I meet on the street tomorrow may end up being my eternal companion in Heaven. Thus, you're protecting your own self-interest in looking to love others. That's how I see it, anyway.