I liked the character, I liked the "different" side to Giles we got to see with her- I think she worked well at bringing him out of his shell, and giving him his own life, as opposed to simply being Buffy's Watcher. I do think that it was foolish of her to keep her secret about Angel (though reading through the script of Innocence again, just to make sure, and it doesn't seem that Jenny knows about the "soul loss" part of the curse- her uncle tells her about it after Angel has disappeared. Perhaps she assumed that her ancestors wouldn't be stupid enough to put a clause into the curse that brings back the demon that caused them the misery in the first place...)- if not for any other reason, then for the fact that she saw how much Giles' dark secret ended up hurting her, and nearly splitting them up. Would have been good to show her learning from that experience.
I do think that the Scoobies are very judgemental in this case, though, especially if Jenny was truly in the dark about the soul clause, which, judging by the script, she is. I mean, Giles kept his past secret. Buffy, in the very next season, doesn't tell anyone that Angel's back, despite how much they suffered at Angelus' hands. None of them are always that great with the openness issue. I think to a certain extent Buffy was scapegoating, in Jenny's case- the curse had been caused by her sleeping with Angel, she was (admittedly, without knowledge) the reason Angelus reemerged, and then she doesn't kill him, which results in more innocent deaths. I do think that perhaps she felt guilty, and so treated Jenny more harshly than she would have treated this secret at another time.
I think that it would have been nice to see them reconcile fully (I'm a GJ shipper), and how their relationship would develop, and how Jenny would develop as a character- would have been nice to have seen more conflict between her Sunnydale life and her family's life as the series progressed, especially in Series 3. Would she still be expected to watch Angel after he returned? With Angel having tortured her boyfriend, would she have been, as Giles was, very suspicious of him, and perhaps more willing to watch him again? What about when Angel moved to LA? Would her family have wanted her to follow him? Presumably she would have defied them, if her relationship with Giles was still in place, what kind of conflict would that have caused? Would there have been repercussions from her family? In terms of her relationships with the other characters- would she and Buffy be able to trust each other (especially if Buffy then brought Angel back without telling anyone, I imagine that would have angered Jenny and made it harder for them to reconcile)? Could she have proved a guiding influence on Willow's magic use in Season 3 and beyond? I definitely think there was potential for storylines from her character, had she lived.
I also think it would have been nice to see the First-as-Jenny reemerge in Season 7, it would have been nice to see a scene between Giles and the First, as he couldn't see it in Amends. But I guess that would be a practical impossibility, even if the writer's wanted to do it- as I recall, Robia LaMorte wasn't happy about playing the personification of evil the first time round, doubt she would have signed up for it again.
On the other hand, I can see why Jenny was the one killed off instead of Oz, from a storytelling point of view. Oz is awesome, don't get me wrong, but in terms of closeness to the main characters, Willow looks up to Jenny, Giles is in love with her, as he later confesses, she's deeply involved with the Angelus storyline. With her and Giles's reunion imminent, her death was a real shock. Not to mention with Buffy freezing her out, I think it could affect her with a large amount of guilt. Oz and Willow, on the other hand, have only just "gotten serious", if you like. I think Oz's death would be less of a "shock" to the main characters, apart from Willow. And also, Passion was done so beautifully... I don't see it working so well any other way.