I think this is just fine. I think if you were expecting any more than this, you were setting yourself up for disappointment. I mean wasn't Pete's Silly Sideshow always supposed to be a M&G?
And no this did not take 2 years to build. When Storybook Circus soft opened back in March, this phase of the project barely began. And from the concept art, it looks like a very elaborate area with a lot of detail. In addition, Pete's Silly Sideshow is also opening up with the Big Top Gift Shop with the bakery as well as the quick service restaurant (and they just started that construction a month ago). So this isn't the only thing opening up in 2013, and at most it would be a little over a year for this whole area to open up.
As for the "better use" of the area, when is the last time someone saw an elaborate dark ride in the middle of a circus? I don't think that would have fit with the theme of the land. Perhaps a show? Sure, that would have been nice, but the Magic Kingdom already has a bunch of shows (Country Bears, Tiki Room, CoP, Laugh Floor, Hall of Presidents, Philarmagic) Adding another show, to me at least, will either take time away from the other great MK shows, or provide a show I'll only see every once in a while simply because I don't have time. I'm sure people can also say that M&G's are everywhere, but I think that is a little different.
I'm older now, so I don't go to the M&G's anymore. But we go down to Disney with my smaller cousins all the time. One of the biggest thrills for them is meeting the characters. That is one of their major attractions, it's something that they "ride" everytime we go down. And for the parents, it's also a big thrill to see their sons and daughters taking pictures with the characters and getting autographs. A M&G is something that can be duplicated at other parks (with Bugs Bunny etc) but there is something nostaglic about meeting the Fab Five and other Disney characters inside the Disney Parks. It's something special, and in no way do I think this is a cop out of imaginaiton or creativity. It's something that brings joy to kids, kids at heart, and parents as well. Having some of the favorite characters (Minnie, Goofy, Donald, Daisy) all in one well-themed circus area, I think is a great idea, and it's what I thought Pete's Silly Sideshow would be the whole time. So I look forward to seeing the finished product in 2013.