The drive itself was actually very powerful and capable, it just was very limited by having to talk to the C64 using the Vic20-compatible interface, which had issues.

That's why there were so many products for the c64 to fix it: Epyx Fast Load cartridges, for example. And plenty of games worked by having you first load a very simple file that just installed faster disk IO code and then used that code to load the rest of the game.

That's basically what Disk II drives did on the Apple II, just for EVERY (bootable) DISK instead of only some of them: The first bootloader is encoded in a simplified method so that they can save firmware space, but the first bootloader is just better disk IO routines to load the rest of the disk.

Apparently they initially intended for it to have a fast parallel connection which would have meant a huge gain in speed, but they ended up with a serial bus on the C64 to be compatible with VIC-20 disk drives. This was supposed to be offset by hardware that could maintain a high serial speed, but the design ended up half broken, which they had to amend with the slow software routines before release.

It sucks, but it's nice that the computer could patch the disk drive at run-time and have it run some more sophisticated software for a speed boost. For example, the Action Replay 6 comes with a "fast loader" that performs some 18 times better than the kernal loader and stock 1541 firmware on normal CBM formatted disks. Still not as quick as Woz' Disk II...

In 1983 C64 was $300, 1541 was $300, 180K Tandon TM100-1 PC floppy drive was $189. Why sell cheap floppy drive when you can sell one for the full price of your computer and double the profit? Commodore was manufacturing all mayor chips inside it after all ;-/

It got even worse when Commodore shat C128D out its engineering hole. 3 CPUs for the low low price of 3 CPUs, two doing nothing 99.999% of the time, all in all 85% of Amiga 500 price, 100% of Atari 520ST price, at 10% the power.