Sure, there may be problems, but they've already shown that they are willing to fix them. Next to search itself, Gmail is probably their single-largest profit center, so if they take the bold step of integrating Buzz into Gmail, that can only indicate a long-term commitment to making the service work. In short, no, Buzz is not dead already. It's getting off to a less than stellar start, but it's very far from dead.
By "already dead," what I really meant was "Buzz is doomed from a user experience point of view," not "Buzz is already a ghost town." (And as cabalamat guesses, there is probably some wishful thinking involved.)
Still, a lot of my complaints would need to be addressed with significant changes to the service (changing how we are notified of replies & mentions, de-coupling Reader & Buzz and perhaps Gmail & Buzz, uncluttering the UI, showing fewer strangers). I can't think of any Google product that was ever fundamentally changed on this scale. Wave would be a good example of a service that could really use a rethinking of the UI (there are at least 4 or 5 ways to dismiss a Wave: Archive, Mute, Delete, Mark as Read, Mark as Spam, for example), but it hasn't gotten it, and I am pessimistic that this will ever happen.
Maybe there's an element of wishful thinking involved? I would love it if Buzz did die, and Google learnt not to do something like it again.
Being gmail-based also provides a natural content filter: somehow gmail accounts are relatively free of morons who tend to inhabit hotmail/AOL, hence the advantage of higher quality discussions on Buzz as opposed to Facebook.
That, plus the absense of a silly message length limit make buzz the only social network I'm using.
Certain groups of people might find Buzz useful, but I'm sure more won't than even those who don't find twitter useful (at least twitter has more famous people on it that others can follow).
I don't want to bother logging into another account to check something, but since buzz is right there, I'll check it.
The fact that anyone can inline images or video, and in the future other forms of multimedia content is great.
BTW, a little off topic but: how difficult is it really to remove duplicate entries in Google Reader and similar aggregators? Even better: recognize which articles are original and which are just summaries with a link to the original article. Eliminate duplicates, favoring original articles. (Seems like NGRAMS or comparing word count statistics might do the trick.)
I wouldn't call it dead yet...