So I was thinking about it and even though the 3 televised seasons of NXT (in its original format) were absolutely horrible, the tagline of the show was "who will be WWE's next breakout star?". Let's look at the people who came from the show:
Prime Time Players
Even if the show was crap, it sure as hell worked in that it introduced us to some of the biggest/most promising names in the current/future WWE. All of these people have become big (PTP, Barrett, Axel, Kaitlyn) and even HUGE (AJ, Bryan, Ryback) to the company.
You really didn't like season 1? It was different and entertaining. I'm still mad that they released Tarver. Season 2 was meh and Season 3 was hilarious. Season 4 was good for Bateman but anything after that was for the birds.
With the first season I watched the whole thing because I never knew what to expect and like you said it was new. Season 2 had some good wrestlers/personalities (I'm actually a really big fan of Low-Ki/Kaval and WWE really dropped the ball with him..and I enjoyed Percy Watson and Alex Riley too) but it was too similar to season 1 so it dragged a lot at times
But like I said season 3 was even higher than Smackdown on my "must watch" list. I remember when Cole started keeping the big gong next to the announce table so he could gong the segments when they started boring him. It was just amazing
Overall I think if they just treated it like they do now, as a fully separate show with storylines and matches and just left it at that, it woulda been a lot better. All 3 seasons created some amazing unintentional comedy though. One of the best was Eli Cottonwood's "I don't have a mustache" speech (followed by Cole saying "um yes you do")..