It's serviceable for some contrived use cases, but a long, long, long, loooong way from "fantastic".
I lived in Belltown first, and then Capitol Hill (right along the Broadway corridor) - both transit experiences were pretty shitty.
The transit is serviceable during off hours, but during rush it is an absolutely, completely unmitigated clusterfuck. All buses leading out of downtown are at crush capacity, and the ridiculous rule that back doors can't be opened means that at every stop there is a massive pile of human bodies as people towards the back shove and squeeze their way to the front to get out - only to run into crowds of people outside trying to get in.
If you work in the central business district, and live in one of the nicer "trunk line" neighborhoods, and you can stagger your work hours to avoid the worst of the inhumanity of Seattle transit during rush hour, you can get to work pretty well. If any one of the three conditions is not met, commuting via transit is going to be absolutely dreadful.
The only place I've ever experienced transit worse than Seattle was in the industrial slums of London, Ontario.
There were drivers who were enforcing this with an iron fist.
They've since backed off, but it's pretty clear that the people making the rules at King County Metro do not ride the bus.
Also, unless the attendants with portable scanners are present, you can't enter the back of the bus unless you're willing to cheat -- it's a double-edged sword.
Eliminating the free-ride zone has solved all the problems from my perspective. I see no issue with only allowing people to enter at the front; it doesn't cause any hassle as far as I have seen. I guess it would be an issue if you really felt the need to sit at the back?
You are correct about rush hour busses out of downtown being absolutely packed though. While it can be an unpleasant ride, passengers are very rarely turned away.
I live 2.4 miles from my workplace -- Capitol Hill to Pioneer Square and I could run to work faster than the non-transfer bus that went between my front door and 2 blocks from work.
Now that they've changed the bus system (Sept 2012)? That's a transfer. Yes...between one of the most densely populated neighborhoods and a reasonably dense job district.
During rush hour, with bus transfer, that could take over 48 minutes for 2.4 miles -- that's 20 minutes/mile or 3 miles per hour. I've walked it in that amount of time +/- 2 minutes.