I don't think that I'd say that Tashigi's character was 'ruined' by Punk Hazard. If anything, what happened to her there was basically exactly what happened to her at Alabasta. While I'm not saying that's a good thing, it does effectively mean, to me at least, that her character stayed exactly the same. It does hurt any hope for development for her in the future, in which sense I suppose it ruins her as a character in the long term, but that seems a slightly odd way to use the phrase.
Actually, that said, I would argue she did have a moment of character development, albeit quite small, by the end of the arc. While at the arc's beginning, she was becoming even more firmly entrenched in the black-and-white belief that 'pirates are pirates', by the end, she chastised her crew for talking down about the Strawhats, signalling, I think, at least some degree of acceptance of the fact that these pirates, at least, have some good in them, and that perhaps things aren't so clear-cut as she would like them to be. Given how the over-arcing plot of One Piece seems to be shaping up, I found that to be quite a great, and notable, character moment, and find it a bit of a shame that I can't recall ever seeing it brought up when people talk about Tashigi in that arc.
Speaking personally, I wouldn't actually mind if Tashigi never became a particularly strong character, fight-wise. Sure, she's a relatively major recurring female character, and it would be nice to have a better representation of strong fighters on that front, but I don't think being physically weak has to be a bad thing. All that said, though, I do agree with what Crystal and others are saying, so I guess I'll try to add my voice in explaining it to those that are disagreeing, as I don't feel they are actually seeing what I believe is being said.
Going back to Crystal's first post on the subject – and I apologize in advance, Crystal, if I misinterpret anything and put words in your mouth -- the issue is not that Tashigi lost to Law. The issue is not even, necessarily, that Tashigi lost to Monet. The issue is that Tashigi never really got a personal high moment in the arc at all. As Crystal said, One Piece is a story with an optimistic enough bent that good people that try hard get something to show for it. I'm not entirely sure why everyone seems to be interpreting this 'something' as having to have been defeating Law, or Monet. The latter would have worked, certainly, but any personal achievement would have.
Compare Smoker, in the arc. Granted, he was the punching boy of Punk Hazard, as people like to say, defeated by Law, Vergo, and Doflamingo. However, discounting that last -- which I feel occurred as a sort of coda to the arc, rather than within the arc proper -- Smoker actually ended his involvement in the arc on a personal high note: he retrieved Law's heart from Vergo. Yes, he was once again defeated in the process, which is sadly probably the main thing anyone will ever remember looking back, but he achieved a goal that he set for himself, as a matter of his own personal pride.
Meanwhile, Tashigi... what? She has no comparable moment to point to. She, personally, never really achieved anything. This is what Crystal and others, quite rightly I feel, take issue with. Yes, from an in-story perspective, it 'makes sense' that she was unable to defeat Monet, but that argument is missing the fact that it is Oda who set things up that way in the first place. That aside, I reiterate that she didn't even have to have defeated Monet, if she had simply had anything at all that could be pointed to as a high-point for her, a reward for her perseverance against the odds; but there was no such moment, which is ultimately a disservice to her character.