It seems I've gotten in late on this one. Of course everything is relative. Due to the high cost and high yearly fees with DVC, exchanging is generally not a good deal. Of course the individual situation and circumstance will determine the final outcome.
Some of the key points are that you lose the flexibility with exchanges and there are other options out there that are less expensive, give you more options and trade as well or even better. The fact that you must give up unit size and season for the exchange you want is a big disadvantage. It may seem fair on one front but it is not the general way the timeshare game is played. I can tell you that on every exchange I've made with a non DVC timeshare, I've treaded up in unit size or season or resort quality and in most cases at least 2 of the 3 and since I was exchanging a 2 BR for part of these, there wasn't the option to trade up in unit size.
Other factors are that there are many times people ahead of you because of internal priority, Marriott and Royals comes to mind. No real chance to trade up, only about 10% of II units available for exchange, no access to II directly, no bonus weeks (2 weeks for one) and no wish book. Plus those that own the top locations usually don't give them up either so not many units available at the premier exchange destinations. Most exchanges will also be an exchange down on some level, if nothing else, you're giving up Disney even if the resort received on exchange is as nice.
On the other hand trades are generally request first and can be placed up to 2 years out with a call first to see if it's ok and a $75 exchange fee with no II fee. I'd say that II exchanges are the second best use of points behind DVC resort use and far ahead of
DCL, DC, CC, etc.
Direct exchanges are a great option as are exchanges through independent exchange companies. Both take more work and faith but can be worth it for the right situation. This also gives you options for resorts that you wouldn't have access to any other way (other II resorts and RCI resorts).
As for others having difficulty with exchanges, you must know how to play the game and also own the right bait, not too high or too low. My timeshare are layered so that I only have to give up just enough to get what I want. Those that don't understand the system or own questionable weeks (resorts vs week #) or deposit late or expect an exchange a full year out or are very restrictive in their choices early in their exchange process are going to fail. The timeshare game is fairly easy if you're truly flexible, plan ahead (more than a year), own at the right locations and weeks and know what and when to ask for. It does take nerves of steel sometimes, you must be prepared to fail occasionally and you absolutely must be prepard to wait until 2-3, months before your travel to get an exchange.
And don't even think about buying off Disney Orlando for exchanges and that includes Marriott unless you get a real steal, we're talking $500 for Platinum time at GV. The trading power is just so low. Now if you want to use it every year, that's another ball game as they are great resorts in their own right.
Now for those that want to exchange rarely, are very particular with their exchange and don't care if they get it or not because they still have their points or that don't want to learn about "timeshares" or play the game; DVC alone may be the best option. Those that bought DVC and didn't want to have to think about vacation again except to know it's through DVC, are certainly entitled to their own little world and none of us should tell them they are wrong. The tragedy comes when someone is planning to buy and doesn't get all of the information ahead of time to make their best decision.
