Disco, your analysis points out, however, how a good writer could have looked at Hal's origin even slightly different and made him an interesting character w/o making him nuts then evil.
Think about it: what an alien, or alien race, might have thought were the perfect traits (eg, a "Man without fear"), might not be perfect traits in Earth society.
In the case of Green Lantern, we could have kept Hal, kept him sane, but made him a slightly more skewed, and interesting, character.
Make him a bit of an a-hole. A gunslinger. A cop. An "Ollie North meets Capt. Kirk" type.
Have him great at handling intersteller menaces, but crappy at home. Make him "the Great Santini" with a ring.
Ultimately, the "Green Lantern Corps" was a group of Cops.
And conflicted, shades of grey, cops can be hella interesting (see, eg, NYPD Blue, the Shield, Training Day, etc.)
And, let's face it, Kyle hasn't set the world on fire either. So it's not like this was an experiment that WORKED.
