Why does the bitcoin blockchain need to be used for normal transactions? Do you not think a neutral payment rail/unit of account between nation state level actor’s could be valuable?
The goal was "a purely peer-to-peer version of electronic cash". That is, money.
If you are proposing a new goal, a settlement system for couple hundred named organizations with strong relationships, then a) that's not money, and b) the Bitcoin system is socially and technically wrong for that. But if we keep the goalposts in their original location, Bitcoin is clearly a failure when you look at how the competition has done.
The main alternative would be to issue a Bitcoin backed currency. But then you're just re-creating the gold standard, and all of the problems that go along with that.