I think the “bugs” were too obscure a reference for many more casual Trek fans. The Dominion being involved was a good should out to DS9 and Borg are pretty well known Trek Villains. I was disappointed we never really had follow up on the “conspiracy bugs” but I don’t think they would have worked for Picard. As much as I was thinking “Borg AGAIN?” For a show called “Picard” which has Seven as a major character, Borg made sense. And tying the dominion in was tying DS9 and TNG/Voyager together. S3 of Picard really did a good job featuring all three of the series of that era.
Imagine it's 1981 and you're working on the new Star Trek movie plot - how many people
really remembered Khan from that one-off episode? Now compare to the Romulans and Klingons who were used more in TOS and were more recognizable - to the same iconic status as the Borg despite the few number of adventures they had? (We didn't see Klingons proper until TSFS. Nobody includes the one-off in TMP as Gene was wanting everyone to be buddy-buddy in it and it sorta shows. TNG got that right anyhow... Romulans were present in TFF and TUC, but just whip out AftterEffects and digitally replace their bodies with apple trees plopping their seeds everywhere and nobody would notice the difference. At all.)
It's really not too obscure a villain, as "Conspiracy" is a highly rated episode, especially considering it's cootie-laden season one. Casuals might just say "Oh, the space crawdads one?" But ask them about the characters in 70 or so TNG TV episodes and they won't have a clue by comparison. Even some devout fans would slip up, look at the Red Letter Media trivia contests of recent - I'm pretty sure they're more than casual fans and they got tripped up by some doozy questions too.
Any character can come back and be made to work. I'll get to a really good doozy of an example later.
Many casual TNG fans would be just as bemused over this "Dominion" thingy they kept being talked about in PIC, as DS9 - by the time the Dominion was first introduced - was arguably a niche show when compared to TNG ever was, based on Neilsen ratings.
Casual fans aren't dumb either, missing bits and pieces have tons of making-of books and materials readily available, and even if they weren't then it's surely not impossible to do a recap - either folding it in via the script, or slapping up a couple of clips with "LAST TIME ON" superimposed if nothing else?
Plus, it's a refreshing breather from reusing the same baddie as "the big bad" fodder
yet again. Season 3 may used them better and went back to VOY regarding big plot points, but they still came across as "
Again?" and not wrongly so. They are the most recognizable villain/monster, but overusing them doesn't help. And why didn't season 1 look up where they left off in VOY, instead of the goofy route they took? (And why replace the iconic green hue with bluetooth blue? Cuz, style? Oh well.)
Best reason of all to put this "obscure" idea to rest is this: The Pakleds were just as much one-offs as Khan was in TOS. Worse - not only were the Pakleds obscure, but they were also not even liked by fans, casuals, and/or otherwise. The space crawdads are far more readily recognizable than the Pakleds were, and without responses being said in derision. But they came back and were added a terrific sense of threat with some good scripts. Is there really a reason that the neon 80s crawdads couldn't make a return with their host creatures and not be successful? After all, the original idea was that these fritters were employed by big insect things called the Borg - but the 1988 writer's strike put the kibosh on that, resulting in the cybernetic monstrosities because that was a quick (and impeccably brilliant) way to get the show back on track again. (There was a directors' strike the previous year and even an actors' strike in 1988 as well.)