IMHO the only problem with Google Wave's implementation was that it didn't integrate with normal email, limiting its network to Google Wave users. This seems very obvious, but I rarely hear people mention this when Google Wave comes up. Did you have something else in mind when you said it had terrible implementation?
The main thing was the integration with email, I was amazed it didnt have it from the start and convinced that it would be coming very soon.
But the UI also irked me, it was far far to bloated with features I didnt care about (replay), when the thing that I care about was it being as fast and responsive as gmail, which it wasnt close to.
It's just a noisy mess, poorly designed, with a lot of weird design decisions and exotic patterns that only added to the noise.
It starts with a way to complex proposition. Google basically created the entire vision instead of the basic core functionality and then expanded on that, optimizing in the detail rather than for the big shows.
Etherpad started the right way. It started very lean with a basic principle that then evolved with time, slowly. And now it got bought.
I think there's room for a lot more innovation in this area. I'm working on some open source code for doing Wave-like stuff in a way that will be easy for people to integrate with other projects. Have you ever tried to edit a wiki page, only to discover that somebody else was editing it and had acquired a lock on the whole page? There's no reason why you shouldn't be able to both edit it, Etherpad-style. Or rather, the reason is that making something like that is hard. But it shouldn't have to be. I hope to have something release-worthy in about a month; right now I've got a distributed text editor prototype that looks like a cross between Etherpad and Notepad. It works, but the code needs an overhaul.
Another problem with Google Wave is that it's inherently centralized. They transform the insert/delete operations so they can be applied out of order and still converge on the same document state. Unfortunately, the method they use for this requires a central server to maintain causal ordering of the operations. There are ways of doing this that don't require a central server, which could be handy.
But have you looked at it recently? I've been using Wave to manage most of my project-related communications (with one or two partners), and it's fantastic. Like Etherpad, but a lot more powerful. And fyi, the Etherpad team is now part of the Google Wave team.
I don't think its extraneous features detract from it as much as you're suggesting, but I also am probably not so qualified to judge since I barely use it (since there's no email integration). We've got highly portable hardware that integrates IM, SMS, email and media two-way/embedding (smartphones) but there's definitely room for a software or web application to provide all of these in one place on their respective platform. That's what I was hoping Google Wave would provide, but the rollout and self-containment is the critical factor in crippling it
I agree that they were missing some core features in the beginning. It has greatly improved though.
They've opened it up now so that you can design a better interface if you wish to. They've also opened it up to anyone with an email address now, and expanded on the robots and gadgets.
Now I don't use Wave that much because I don't often need the collaboration that it offers. However, if they could integrate Wave and Gmail, it would be immensely useful, especially the gadgets and robots.