I viewed design error #1 as the killer feature of wave.
What I found is that it turned IM-like communication into a high-bandwidth medium comparable to what you get in a phone conversation. It managed that while also retaining nearly all of the advantages of an IM client.
I think that you're right #1 is a 'killer feature' in that it killed Wave: think about such feature at work, would you really like to see your boss see when you made a big mistake without having the time to think twice?
Even if you can disable this setting, good default matters!
What I found is that it turned IM-like communication into a high-bandwidth medium comparable to what you get in a phone conversation. It managed that while also retaining nearly all of the advantages of an IM client.