Radical or not, it doesn't matter. The KMT was much more radical than the warlords it defeated. So what? I bet the US would have recognized PRC in 1949 if Mao promised to protect the US's interets. The Ameican ambassador didn't leave Nanjing when PLA seized the city. Instead he satyed there for several months and tried many times to contact CCP authorities with the help of his student, Huang Hua, who later became Chinese foreign minister. But Mao asked the US to apologize for its "mistake" or "crime" of supporting Chiang in the civil war before considering the possibility of establishing any diplomatic relations with the US. Of course this was something the US wouldn't do, so CCP expelled all US citizens from China.
>>They did not even have the appearance of a legit government.
Actually the CCP did set up a central government, called "The Soviet Republic of China", in its territory. Of course no one recognized it.
>>What should America do? Choose a bunch of hooligans running around the countryside, or a somewhat established government?
An established government was the right choice. No question about it. However, the US got so much involved in the civil war between KMT and CCP that there were no way CCP could be friendly to the US after it took power. Otherwise there wouldn't have been the Korea War and the Vietman War. Britain was smart. It stayed neutral during the civil war. Although it was ready to abandon Hongkong when PLA was marching towards the colony, Mao's troops stopped advancing at the border. Britain and China established deplomatic relations in 1950 and the CCP didn't confiscate or freeze British assets in China.
US interests were to fight and defeat communism.