My experience was quite the opposite: We used this IDE in the first (maybe two) semesters of my Computer Science bachelor's programme (obviously not for all classes), and it was great. BlueJ allowed us to focus on the modeling and structure aspects of programs. For introduction into OOP it was a very nice tool.
Obviously after a couple of months, it's quite limiting – you don't want to write any proper programs in it, but for educational purposes and classes it's great.