The concept they had was valid, and the balls they had to pioneer the idea and stick with it despite the uproar was admirable... However, the fact that they didn't finish it prior to launch was a blunder, it boils down to the fact that the game in general needed another year or two in development.
But there is one more major flaw in the wards system, one that's out of SE's hands, and that's the players. They figured that the wards would give crafters a chance to thrive, but all it does is the exact opposite...
The AH system in FFXI kept crafters on their toes. They had to adapt to the supply and demand driven selling system, and when supply surpassed demand, undercutting ensued, and they had to leave that particular market and find another. I was a crafter in ffxi, as were several of my friends and even my brother. We all did very well, amassing vast fortunes, and we did it despite the undercutting that everyone seems to think is so gamebreaking... It's not, it works, and it's supposed to exist. It's just simple supply and demand. The inept crafters who wanted to just craft 1 or 2 things, never adapt, never change, and mark simple easy no risk synths up for ridiculous amounts were destined to fail. They didn't fail because of the AH, or because of undercutting, they failed because they were terrible crafters,
Successful crafters made the games economy what it was. When markets got flooded, they moved on and made other things, catering to areas where the demand was there, but the supply wasn't, which made the people who needed the supply happy, and in turn was profitable for the people with the supply. Again, basic stuff here, but it worked.
Now, the wards is the exact opposite of a good idea. At launch, it placed an arbitrary, enormous burden on the buyer, because finding anything was so incredibly time consuming. Due to that, people often just bought things for far more than was fair, to save them the trouble of searching longer. That's bullsh*t. And worse, it caters to lazy greedy crafters who don't want to be creative, or fill the void where the demand is highest, or anything else that drives a good economy. They just sit there, spend 20k on cheap mats, make a little to no risk synth, and then price it at 200k-300k+. Normally nobody would buy from them, but since finding alternatives was such a pain in the ***, people bit the bullet and payed those prices.
Let supply and demand drive the market, and if the inept crafters aren't able to get rich off ******** people, boo hoo. The crafters that we want to have around will always be able to make a good profit, and they will supply all the things people need and want, and buy the things people farm to do so, which dolls out slices of the profit pie to yet more ppl, and everybody wins.
So yeah... An Auction House is the way to go. The wards may still have some potential in the high end or slow to sell areas, and perhaps for other things as well, such as beastcoins or w/e else can't be listed on the AH. But seriously, an AH makes buying as efficient as it can be, and the competitive environment for sellers keeps them from getting lazy, and shoots down their attempts to be too greedy most of the time, it just betters them overall.