I agree. There was no WAL logging, for instance. Most people consider 7.4 the first actually-possibly-not-a-terrible-idea release.
Then again, Postgres -- the project -- did not try to position itself (was there even such a thing as "positioning" for Postgres 16 years ago?) as a mature, stable project that one would credibly bet one's business on.
Lots of early database releases are going to be like Mongo, the question is how much the parties at play own up to the fact that their implementation is still immature and present that starkly real truth to their customers. So far, it seems commercial vendors are less likely to do that.
Well, 8.0 is really the first really good release.
However, actually-not-a-terrible-idea is pretty relative, when you look at how the industry has evolved in the mean time. I mean, compared to MySQL at the time, PostgreSQL 6.5 was really not a terrible idea. 7.3 was the first release I didn't have to use MySQL as a prototyping system though.