I agree that this should have happened in season 1.
In fact, this is how I'd compress the series so we could get to where we are now without all the bullshit:
1x01/02 Air: two parts instead of three, as part 3 dragged a bit. We did not need an entire episode of bitching in the desert. Cut out the "water bug" subplot so we don't get "Water."
1x03 Darkness: Still worthwhile on its own terms.
1x04 Light: Dovetails nicely with "Darkness," so I'm OK with it.
1x05 Time: Keep it as-is.
1x06 Earth/Life: Compress the Earth/stone crap into a single episode.
1x07 Justice: This one was good, keep it.
1x08 Space/Divided: Remove the mutiny subplot. Focus on the alien attack and the tracking device inside Rush.
1x09 Faith: Kept only because it looks like this episode has later ramifications and it would be hard to get rid of entirely.
1x10 Lost: Yes, we got rid of "Human." It was just kind of a waste. "Lost" was excellent, though. A strong episode to go into the midseason with, though not a cliffhanger (and I think that's fine.) If we really need a cliffhanger, end with the disruption of the ship's FTL from "Sabotage."
1x11 Sabotage: Keep it. But not "Pain." No, fuck "Pain." It sucked.
1x12 Subversion: A good part 1 (of 4.)
1x13 Incursion: I'm not sure this really deserves two whole episodes. Maybe push some bits and pieces of part 2 into the next episode.
1x14 Intervention: Resolve the LA incursion. Skip "Aftermath." Other than Rush finding the bridge (which could easily happen at the end of "Intervention" or the beginning of the next episode) and killing Riley (which could be done in some other way more relevant to the story) it was not a very useful episode.
1x15 Awakening: Spend more time on the seeder ship. I wasn't sold on the silly alien storyline. Get Telford stranded on the ship, though. Interested to see how that plays out.
1x16 Pathogen: I liked this one and it had some good character work. Keep it. "Cloverdale," however, can burn in hell. Since Scott getting Chloe's blood didn't amount to anything at all, we can skip that episode entirely. "Trial and Error" was also pretty pointless, so unless the "Destiny
can get in our heads!" notion ends up going somewhere, I'd be ready to discount that one, too.
1x17 The Greater Good: And here we are!