Was there ever any thought to giving Hong Kong and Macau to Taiwan/ROC as opposed to Red China?
No way. The UK had legally recognized Communist China as the legal 'China' in the 1950s over Taiwan, and thus all negotiation with 'China' goes through 'Communist China'. To do otherwise would be to negotiate a treaty which Communist China would not recognize; and in such a case you might as well just keep the damn colony for yourself.
I'm curious what happened before 1979. I see no evidence that PRC demanded HK before this date.
Hong Kong's future was re-negotiated not because the PRC demanded it back, but more because the British were concerned about what would happen
legally to the New Territories once the lease expired in 1998.
When the 1898 Convention On the Extension of Hong Kong Territory was signed in the wake of Qing weakness following the 1st Sino-Japanese War (around the same time as the Germans getting Qingdao, the French getting Fort Bayard/Zhanjiang etc.), a 99-year lease was agreed to because a) the British negotiator thought that in practice that meant 'practically forever' and b) because the New Territories were intended to be a 'buffer zone' for Hong Kong against an attack from the landward side of the colony, which was not so well defended as the coastal approaches.
So for more than half a decade the New Territories were nothing more than wilderness and wasteland. But in the 1970s with the explosion in Hong Kong's population caused by refugees from Communist China, Kowloon + Hong Kong Island were becoming too packed and so the decision was made to create a series of 'New Towns' in the New Territories, as well as opening the region up for private ownership + investment. Nowadays, c.60% of Hong Kong lives in the New Territories.
In the 1980s, the legal status of the New Territories was becoming an issue for both residents and private companies. If Britain still retained the New Territories after the expiry of the Convention in 1898 Britain would effectively be 'squatting' on Chinese land, which meant that China could legally challenge all ownership of land in the New Territories post-1998 in an international court, if not worse. This was obviously not good for the oligarchs, all of whom had invested much in the New Territories, and so the Government was compelled to talk to China about a solution to the problem, therefore leading to the 1998 handover.
So the return of Hong Kong wasn't really much to do with 'colonial guilt' or 'PRC pressure' or anything. Like most of what happens in Hong Kong, the handover was done essentially because the rich guys wanted to ensure the safety of their investments.