I think the thing that I have the hardest time with is the continuity of the fifth season. You have Dawn introduced as this character who's Buffy's sister but is ultimately a very powerful mystical force and after the whole Glory-storyline is resolved in The Gift, it's never mentioned again.
Whereas other major issues that are raised in Season Five keep cropping up again and again in Seasons Six and Seven. Like Willow's growing magic addiction, and the aftermath of Joyce's death, Joss & the writers don't sweep those issues under the carpet and ignore it. But they do with Dawn.
I think your explanation of how it's the transitional season between "old school Buffy" and "new school Buffy" where everything was possible but it wasn't always a good thing hit the nail on the head.