Otherwise outside of sampling rate (MD were ATRAC only at first), the points you raise were not an issue if you bought into the ecosystem: buying music directly in MD, playing it on your portable player and sticking it in your Sony compo would be fine. Buying blank MDs and recording, copying etc. on them was mostly fine, all of that on a format way more sturdier, stable, and convenient than CDs.
I think CDs would have "died" and get replaced with MDs if it wasn't for Sony being themselves and screwing it up.