The new flagpole was made from a kauri felled at Whangae, near Kawakawa, and carried up the hill by 500 warriors. It was named Whakakotahitanga-o-nga-iwi-e-rua ("The coming together of two peoples") on January 29, 1858.
As speaker after speaker reminded those gathered on the hill yesterday, the Governor of the day, Thomas Gore Browne, was in the Bay of Islands at the time but snubbed the peace-making ceremony, apparently on the advice of officials wary of Maori intentions.
In preceding years the Government had refused to help pay for the new flagpole, leaving hapu to raise the money themselves. Another invitation, when a new plaque was unveiled in 1932, met a similar response.
As the successor to Governor Gore Browne, Dame Patsy said she had come to the Bay of Islands 160 years later ''with a strong sense of unfinished business''.
''I hope you agree it's better late than never.''
Taking part had taught her a chapter of New Zealand history she had no idea about, she said.
''Everyone knows the story of Hone Heke chopping down the flagpole, but nobody knew the story of northern Maori replacing it and paying for it themselves as a symbol of kotahitanga, or unity, between the Crown and Maori.''
Dame Patsy said she felt humbled by the pride, sorrow and joy she saw in the descendants of Hone Heke and Maihi Kawiti during the ceremony, first atop Maiki Hill, then on the lawn next to Kororareka Marae.
Ngati Manu leader Arapeta Hamilton said the 160-year wait was ''an indication that we never forget, no matter how it takes''.
Colwyn Shortland and Huhana Lyndon were masters of cermonies for the day.
Ms Lyndon, a Kawiti descendant, said the event was also a lead-up to the first national commemorations of the New Zealand Wars on March 9-11 at Waitangi and Kororareka (Russell).
New Zealand history needed to be better understood and embedded in the national curriculum, she said.
''Let's do this, let's work together on sharing our histories as one nation,'' she said.
The ceremony was hosted by Kororareka Marae in conjunction with Te Au Marie, a committee charged with organising next year's Northland commemorations of 250 years since Captain Cook's visit.
The flagpole, which was extensively restored in 1991-93, is used by the people of Russell on 12 occasions a year, including Waitangi Day and the anniversary of the Battle of Ruapekapeka Pa.
Also at the ceremony were council, church, police and Defence Force leaders.
■ Maihi Kawiti's peace overtures were not entirely ignored. Governor Gore Brown gifted him an official seal carved from ivory in the shape of Queen Victoria's hand.
Yesterday his descendants, including Maihi's great-grandson Te Raumoa Kawiti, 89, brought the treasured Rongomau (peace) Seal to the ceremony.