See, I don't like this argument. It's obviously not a complete dumpsterfire. If it was, it would've been dead on arrival. Though even then I could see it lasting on life support for at least a year because, let's face it, the core demographic they're appealing to knows just how niche of an interest they represent so they'd latch onto anything that directly tries to appeal to them, in the vain hope that it might just get better. You could also go the other direction with the serviceable argument. It's just serviceable, which makes it bad. You know what else is serviceable? Family guy and plenty of other shows on television that are in an okay enough state to be broadcast, but that doesn't really shield them from scathing criticism, does it? It just means that they're good enough to be profitable, same case as here one might argue.
Just to make sure, I never said that this shields CoC2 from critique. It's as you said - niche interest causes people to latch despite the quality. There are mediocre games, anime or other media I like that aren't amazing, but they are done in a specific niche that I really much enjoy. Or they just have elements I find amazing but everything else is of little interest to me.
Nowadays, internet exists in bubbles a lot of the time. I remember seeing some dumb streamer who only plays CoD and cannot handle peak videogames that aren't CoD. Or people who only play FIFA and enjoy it. Or those who think Family Guy is the peak of comedy. I am sure CoC2 has a few fans like this.
This is pure spitballing here, but if I had to divide audience of CoC2, I'd argue we would have the following groups
1) Tourists - mostly Steam users, who bought the game, played it for some time to jerk off long enough before being bored and probably left a positive review. They haven't really engaged with a game on a deeper level and just assumed that the writing the game throws at you is good and solid, especially because it does "look" as if it's above other porn games. I also read the negative reviews to see if it's similar to what we have here - it's not. It's mostly complains about lack of gay and straight female content and the removal of Berwyn and it's writer, probably left by patrons who bough the game on Steam to support them and felt upset over this decision.
2) Fans - people who continually play and maybe even support the game. Just like Steam users, they don't engage it on a very deep level and will mostly likely be only upset by the quantity of content, not it's quality. I mean, CoC2 still provides them with text-based smut RPG they wanted, it's just that their bar for quality isn't very high.
3) Pretentious fans - Same as above, but the main difference is that they feel like they are engaging with the narrative and the world on the deeper level and think it's deep, well-written and great to read despite it having many faults they don't really notice. Think of them like TLOU2 fans who believe it's the greatest story on Earth because their standards are weird and they have specific quirks that made them really like something actually mid or just outright bad. Naturally, they aren't self-aware.
4) Self-Aware players - Those who play CoC2 for scraps of occasionally good/niche content they like, but otherwise don't really engage with the game. They don't hate the game, they just don't care about it. Indifferent unless it's something made for them.
5) This Forum - I don't think I need to describe it.
6) Ghosts - People who pay for 15 different subscriptions for things they don't use because they forget to cancel them.
The reason for this long af dumb classification is mostly to illustrate that there are many players for whom the major faults of CoC2 don't matter - either they don't care, don't notice, CAN'T notice or think it's okay. Most games have this and CoC2 is, as you said, good enough where it can get this divisive audience that will have a hard time communicating with each-other, because they believe their viewpoint is the only objective and fair one.