The rule of law is often violated in the name of "legality" according to Hayek's definition. We see it happening today in Lybia, as an oppressive dictator Gadaffi is crushing all of his opposition under the authority given to him of unlimited power by the government.
It happens here in America as well, we are so concerned with constitutionality that we are trying to put specific limits on freedom by passing on all legal matters to the judicial branch, when really, the power is in the hands of the people. I wonder if we really know what the constitution say...shhh...don't tell anyone that. Of course we've all read it, it's the size of a pamphlet, it's smaller than your TV guide, and yet it's more powerful than your remote in modifying your behavior.
I think that trying to assign property rights to everything and regulating every nook and cranny of society, even the governing our morality is a power that has been handed down by the American public to it's government, in the process, the rule of law has been violated by us asking the courts what is legal and what is not. It is up to the individual to decide justice on a personal level, not the courts, specifically in the recent judicial activism that we have seen defining rights of individuals beyond what is in the constitution. It is in the process of asking others to judge morality for us (specifically the courts in in cases of racial discrimination, sexual orientation, and religious freedom) that we have violated our own constitution. I agree with Hayek that the legislative process cannot be scrutinized enough. Information is power, the truth will set you free.