I so totally agree with you when you put forward the idea the Buffyverse, and I will suggest even to a lesser extent the Angelverse suffered when Joss overextended himself.
I've always avoided discussing it too much, because in order to do it properly it's necessary to criticize writers and producers like Drew Z Greenberg, Rebecca Kirshner, and yes even Marti Noxon. Fans don't like that.
First of all when exactly did the time period take place when Joss had too many pots in the fire? It's not really chronicled with any kind of exact dates. All I can offer is impressions.
In my opinion Buffy Season 7 started with brilliance. I thought it was going to be the classic Buffy Season. I thought it was going to be something so amazing even the Emmy selectors weren't going to be able to ignore it.
It was dark, witty, suspenseful and had us begging for the solutions to the puzzles that were presented.
After Showtime though something happened. Stuff we needed closure on, stuff like, what exactly was the 'disruption of the Slayer Line' all of a sudden wasn't important anymore. The story went rambling off in a multitude of new directions. New unnecessary characters and situations were just plopped down for nothing more than a quick kick. Everything stopped making sense, and it didn't seem likely that it ever would. Our need for resolution, and our faith that it would be provided dissolved into bitching about all the nonsense that didn't add up.
They could have fixed it though. At the time I remember them talking about a final arc of five where everything was supposed to be resolved. I checked out the writers who were going to be responsible for fixing the mess, and they were by my estimation the better writers. Then something confusing happened. Those writers disappeared from the slate to write the final arc of five, and names like Greenberg and Kirshner popped up.
Greenberg and Kirshner were names that had first appeared under Marti Noxon's Season 6 reign.
Greenberg tends to write stuff like Him where nothing seems to be required to make sense if he can throw in a quick goofy image of Buffy with a bazooka, or the troika chasing vampires with ATVs, or Amy and Willow bending reality in a nightclub.
Kirshner can be entertaining, but she tends to want to desert the storyline to deal with her own private issues, and introduce unecessary new characters or ideas like Amanda, or bombs in the basement.
By my estimation these two screwed the final arc of five up so bad not even Espenson or Whedon could fix things with the final 2 episodes.
I remember when it was happening I got all frustrated with members who I believed were putting the blame in the wrong places. I got out of control here:
End of Days takes the rap for the previous 2 episodes
So what was actually happening behind the scenes. Here's my theory.
Sometime after the Bargaining 2 Joss took off to look after Firefly. He left Marti Noxon in charge. The season got disjointed. Stuff no longer seemed to make sense. Canon was messed with. Joss came back to do Once More With Feeling. It was great. He left. Things degenerated again. Joss has always shown desire to be involved with the finale. His name wasn't on the credits for writing any of the final Willow goes witchy arc, but I'm going to suggest he was around, simply because it's so damned good.
Then there's Season 7. By my memory Joss was working on Serenity, and I think maybe Fray right about the time of Showtime.
So does Joss really have that much control over how good the writer's write? You tell me. Compare Marti Noxon's work under Joss supervision with scripts like The Prom and The Wish, to the scripts for the first 2 episodes of Point Pleasant when there was no Joss in sight. Or even compare any of Drew Z Greenberg's scripts under Noxon's supervision, to his Firefly script for the episode Safe under Whedon supervision.
So yes, I agree. When Joss overextended himself the stuff he couldn't personally supervise suffered.