These situations are usually lose-lose. Whatever you do, they have a reason to hurt you. Additionally (unfortunately) there is no easy way out of this, without leaving the company.
The bright side
If the company is not rotten "by definition", then it might help you to report project problems (and there solutions as you see them) to higher management. If they decide tho go ahead, then your manager cannot supersede them. Worst case, if your manager is not at all cooperating, try to have a face-to-face meeting with his manager. Be ready to have proofs of al your claims - ideally as mail communications or similar. Just spoken words are not enough.
During a performance review, I pointed out to my manager’s boss and HR the bad practices my manager.
If you did exactly that, than you pretty much hurt yourself. NEVER EVER tell bad things about managers!! ESPECIALLY not in official meetings. NEVER trust HR to be your friend. They are paid by the managers, not by yourself. Be extra politically correct about everything you say. Even when you say something bad (especially about a manager) make it sound like it is something good.
Right now, you cannot do much to change your performance evaluation review. You pretty much gave 2 choices:
(professionally preferred) Swallow it and continue doing your job. In the meanwhile, improve your reports, your project management style, and your abilities in company politics.
(last resort) Find a better job. DO NOT TELL anything bad about your previous bosses during the interview!!! Just serve them the "new professional opportunities to learn and grow" story.
Are they right? Should I have been more assertive and reported the manager immediately? Is there a correct answer here?
They are right and they are wrong at the same time.
They are right that you should have protected your project better. You should have escalated earlier.
They are wrong to find you as the only scape goat. But that is company politics. Employees are disposable. Managers are critical assets. Even though the reality is usually reversed.