No, I don't think she had any idea about the effect that would have on you. And I will explain why in a moment...

But, first... let me explain what T SHOULD have realized. In my opinion, your T should have exercised healthy boundaries by stopping you when you said things like "I want to kiss you" or "I want to see your legs without the desk blocking them" and "you're a goddess-- and talked about transference at THAT point. She should have gotten to the bottom of why you were saying those things, because those things sound sexually aggressive. In my view, those comments are MUCH more inappropriate and sexually evocative than a hug. I think her reactions to those comments (or lack thereof) is where she failed you as a T-- not by giving you hugs. I think there is a line between comments like "You look nice today, T" which sounds pretty innocent (I mean, I've said that to my T and vice versa) vs. "I want to kiss you." I can't imagine ever saying that to a T unless I actually wanted to kiss her! So, I think that's where your T should have said "wait, that sounds like transference, we need to talk about that. We also need to talk about boundaries. It's okay to have the feeling of wanting to kiss someone (we can't control our feelings) but we need to talk about acceptable ways to express those feelings and how to work through them."

Now let me explain why I don't think your T would have had any idea the hugs were an issue...

While I realize that your work with your current T is done-- and she handled the whole situation poorly-- I think it might be helpful to get a little bit of a female perspective on some of this, just for yourself. Speaking as a woman, most women don't think about their breasts when they give hugs. We just don't think "gee, my breasts are pressed tightly against his/her torso." I hug my female T, my male department chair, my dad, and the little girl I mentor, all the same way. I don't THINK about the fact that my chest is touching the other person. I don't view it as any different from the fact that my arm is touching them as well. It's just that, since a woman's chest is on the front of her body, it happens to touch the other person in the course of a hug--it is not typically viewed as erotic. Speaking on a purely sensory level, it does nothing for the woman (i.e. the owner of the breasts). Unless the person already has sexual feelings for the person they are hugging, a hug just doesn't feel sexual/arousing. Hugs usually feel warm and friendly and comforting. Only pre-exiting feelings of attraction typically get activated during a hug. I also think men view breasts differently than women do; women (even lesbians like myself) just don't see breast as a big deal or as a necessarily sexual part of the body. Sometimes they are, but not usually in the context of a hug.

I think, perhaps, what your T reacted to when she read your letters was the shock of realizing that something she saw as an innocent gesture of kindness, was interpreted by you as being sexually arousing. As a woman, there have been a few times when I've had male acquaintances tell me that they have perceived my gestures of kindness as a "sign" of sexual interest. Those kinds of disclosures can feel sexually aggressive, violating, and scary. Perhaps that was your T's initial response? There's just a cultural thing in our society about being a woman, alone in a room with a man who she views warmly and platonically, and finding out that he has perceived all of these gestures sexually. It can make the woman feel very vulnerable and fearful. Obviously, I don't think that was your intention. Moreover, since she is a T, she should be trained to handle these kinds of situations without reacting that way. But I think what may have happened is that her "T hat" went out the window, and she reacted as a female friend or colleague might. I don't think she reacted badly out of a fear of being reported or damaging her professional reputation (I don't think she did anything to be reported for); it sounds like she was probably caught totally off guard, felt afraid/violated, and realized that she had no idea how to handle the situation professionally (in over her head). Of course, I don't KNOW-- these are just my educated guesses. While I find it highly unprofessional of her to have reacted the way she did and terminated you outright, I do think it is ethical for her to choose to terminate a client if she feels that she is beyond her skillset, if the client is triggering her own personal issues and, as a result, she cannot treat the client effectively. However, if this were the case, she should have first sought supervision (to see if, with guidance, she could continue treating the client effectively), or she should have given you a number of 'wrap-up' sessions in which she reflected on the positive work you did together over the last 10 years, and she should have made it clear that she was terminating for her own reasons, and made it clear that it was not your fault.

That being said, I think there are still things you can learn from the situation (like we all can) which may be helpful in the future. Hindsight is always 20/20 and while I think you did so many things right by being brave enough to tell T about the transference and ask to work through it, I think it may have been helpful to have approached her about it without using an aggressive tone, blaming her, and saying that she facilitated the erotic transference by her actions (like hugs). It sounds like the erotic transference was already there on your end; the hugs didn't cause it. I think you would have felt the transference and it would have grown whether or not she gave you hugs. The hugs gave you something to fixate on, but it sounds like you already had other things going on (looking at her legs, wanting to kiss her, etc). I don't think the transference was anyone's fault-- yours or hers. I think it just happens sometimes. While she should have been able to handle the transference regardless, I think she may have responded more positively if you had approached her more gently and told her your feelings without blaming her, saying that she should have known the hugs were inappropriate. I realize that this does not help you now, with this situation-- but, in future situations, it may be helpful to think about how to resolve conflicts (with anyone) by approaching them calmly and honestly without laying blame or being aggressive. It may also be helpful to understand how that kind of aggressiveness might come across to women. Ideally, a T would be able to work with that anyway, as therapy should be a safe place to explore our reactions and behaviors without fear of judgment or being termnated. But, unfortunately, since your T didn't have those skills, maybe you can find a way to use the forum to learn what you might have learned had you been able to explore this and work through it with T.