It was absolutely that bad. I actually remember being on ONTD (which was essentially Exhale-lite at the time) while I was watching it and everyone was CONVINCED that it was a fake performance, and that the real (see: good) performance would come at the end of the show.
Honestly, it was just sad. I'm not a huge Britney fan, but even I felt a bit uneasy for her watching it. Like Patrick said, it seemed like she was acutely self-aware and wanted to crawl into a hole.
In the end though, it's just a part of her iconic imagery. Good or bad, funny or sad, it's easily one of the most memorable VMA performances ever. And I think it set up a lot of the success she had in the Circus era - a LOT of people were rooting for her after that.
). BOMT was so boring and that 'breakdown' was sloppy.