Is it because you hate precise controls?
No, because they look like they won't work well for a lot of games. Way to imply though :^)
The problem is, it is broken. While some genres are better with a gamepad, there are others that gamepads are traditionally not very well suited for, like most strategy games, and almost everyone prefers keyboard + mouse for shooters because of the accuracy boost. That's what they're trying to change - this is a controller that is supposed to work better for games that would traditionally be played with keyboard + mouse over a controller because it's meant for the PC platform.
Also, I hate that saying. By that logic there would never be any significant improvements ever.
I wouldn't say "broken." That's like saying the D-pad is broken because it doesn't allow you to control a million different directions. But, as you even said, gamepads are suited for different games and consoles. However, Steam provides many, many games that are available across many new and old consoles. They're trying to make it work for a bunch of games that worked for the control-scheme provided at the game's original launch, whether that's its original Steam launch or console launch. You also have to remember not every game works well on Steam with a keyboard and mouse. But you're absolutely right that it could work for certain games, but not necessarily every game. Look at motion controls... It's innovative, new (well, not so much anymore) and pretty cool. But the dead horse was beaten and people realized they weren't as great as hoped. Some games just didn't need motion controls, while some were completely made for them. It's the same for Steam: some were made for typical gamepads; some for keyboard/mouse.
I'm only worried Steam is biting off more than they can chew and will get themselves in a hole. I'm all for innovation, but I hope they seriously work this through completely if they hope to make money off all this, because I think it can be pretty cool if it works out well.