When writing a novel loosely structured upon events that took place in the author’s childhood (an example that comes readily to mind is “To Kill A Mockingbird”), how far afield ought one go to disguise fictional characters who are based on actual flawed people, alive, and dead, but with surviving family members?
You can't libel the dead, so you're probably ok with everyone who has passed on to greater glory. The living ones you'll need to be careful about. And by careful I mean not just identifying a guy as having a small dick cause who would ever claim to be that guy (which is advice I've heard more than once at a writer's conference.)
It's best to change as much as you can so people who know this character won't say "aha!"
It's novels written for revenge that can get you in trouble. There've been two cases I know of that went to trial because of thinly disguised fiction. The key word here is thinly.
The one that caused us all to laugh is this one against AuthorHouse.
The one that wasn't too funny at all is this one.
That said: don't worry. Anyone can sue anyone for anything these days and if you've got litigious enemies, well, nothing will dissuade them from suing or threatening to sue. That's when you get a very good IP lawyer to send a very sternly worded letter that cuts them off at the knees.
If you're writing a novel, we all assume that you made it all up. And if anyone ever asks, that's what you say too.
For a more comprehensive opinion, try this post at the Digital Media Law Project on suing for defamation in fiction.