I'd say, XII was a nice start, but it never got to grow. The movesets might have shrunk, but they were no smaller than such things from other fighitng games. The game has 20+ redesigned sprites out of the box, almost unheard of for a 2D game, especially one with good animation. The lighting tech was also very well done, showing off techniques that very few released 2D fighters have (and only 1 approaching, in Skullgirls).
One bonus point I'll add for "why I liked the comboable/Chargeable CDs" that everyone else has said one place or another: It was a great way to start juggles, expecially for characters who never had such a tool before. I think it was a great answer to "how do we make corners feel dangerous, while giving a game a widescreen size and presentation?"
I even wish some characters got to keep the functionality of Combo CDs, as maybe a new command normal for them. it felt great being able to combo into Baltic Launcher with Leona. Would have loved seeing it become a method to combo into air supers with certain characters. Could you imagine the kinda tricks characters like Yashiro, Billy Kane, Hinako, or Yamazaki would have been able to pull with such a tool? Or what new tools would have been developed for other characters, to take advantage of it?
Clashing, as well, also had it's place. I really wish Terry could still Burn Knuckle into projectiles. What if Yamazaki could gather energy to turn his Double Return into an honest projectile, by clashing his other moves into opponents fireballs? What if Rugal could clash with a fireball while doing his Godpress, in order to power it up, on his way to you? How cool would specials that were MADE to clash have been? Rewarding new properties for pro-actively facing fireballs, rather than running away...
It was also nice to see Garou's counter hit spin back in another game. I really felt like that helped make up for weird hop timing/hitstun... (which wasn't that bad anywho... hop times changed between 98 and 2002 also, but that doesn't mean I think one or the other is suddenly horrible.)
It was a "groundwork" game. A Samurai Shodown III to a SamSho IV. A KoF 97 to 98. A Fatal Fury 3 to the Real Bout series. It kinda diverge from it's own ideas, and grew into XIII, which we wouldn't have had without it. But it's different enough to become a basis for a Dream Match, a UM, or even it's own series, in the future.
It also never bothers me, because I purchased it in order to get in on the fun that Europe, Japan, and the AI guys had been showing for months. It did exactly that. The amount of quaters I might have spend in a few days at the arcade covers the cost of the game, and I ended up getting months of play out of it, and even occassionally get some now.
And every company had their "ultimately crappy 1st outing" on a "next gen" system, in order to get situated to the new hardware. They often had rough feature-sets, lacked extras, or had poor/non-existant online, which would have NEVER been acceptable for their second or 3rd times out on the hardware. The biggest issue? SNKP go their game like that out in 2009, while everyone else did it in 2005 or 2006. Very unfortunate, but not unprecidented.
So, in the end, it's not something anyone should be so hurt by, that they have to insult the others who could see the potential in it, or enjoy the new ideas it gave them. It didn't have the legs we would have liked, but products like that are often produced when developers are overly-ambitious, underpaid, understaffed, or all of the above. It boils down to being a minor sacrifice, when you see what we ended up getting out of it, and what it's framework helped prototype for the future.