It's true there were bad episodes in previous seasons. IRYJ and Go Fish come to mind for me. But even those had redeeming features. AYW just has nothing whatsoever going for it.

I think you're right that the best bet is to see it as a Buffy fantasy, but that's problematic for lots of reasons, not the least of which is why Riley is at the center of it rather than Angel, in light of Forever. I mean, Willow didn't search out Riley at the end of The Gift....

Petrie seems to have had a serious man-crush on Riley, and nobody was there to tone him down. It's a shame.