I did not say I had seen Midler perform live. I have seen much of her film and television work, where, in my opinion, she has performed a wide variety of characters quite well. I had forgotten, also, that I had heard a recording of at least part of a concert performance many decades ago, so perhaps I have heard the persona even if I haven't seen it.
Nonetheless, I don't think one needs to see an actress perform in her own persona in order to judge whether she is performing in-character in a play or musical. Most actors rarely perform in their own personas, yet we have no difficulty judging whether they are in character. One can judge an in-character performance by assessing whether the performer's tone and style are consistent with the script, the time period, and the performances of those surrounding them, and whether they are reaching for laughs or audience responses in a way that takes us out of the unfolding story. A serious and talented actor or actress has no need to do this unless the script itself is dreadful. Hello Dolly may be a bit creaky, but I wouldn't call it dreadful. So it seems to me that Midler is working the role exactly as she should.
But go see the show and judge for yourself. So far, those who have seen it seem to agree that Midler is being respectful of the character and the show. Dolly's character breaks the fourth wall, so Midler must do so as well. She does so very selectively, and shows a lot of restraint. I think she is taking her job very seriously.