Did Israel permit exemptions from mandatory military service for religious groups like the Haredim back then?
I don't know. I only know the things that Walter Cronkite told me back then :)
Yes they did, but at much lower levels then today. I think the number of yeshiva students exempted at the time was around 3000 — basically the elite students, not everyone. I might add that those kind of students would have made terrible soldiers. Most had spent their entire lives in a book and were terribly out of shape. Any many spoke only Yiddish. At the time, Israel needed able-bodied men, yes. But it wasn’t worth the resources to train a bunch of fat, bookish, Yiddish-speaking, anti-Zionist Haredim.