I do think there is a better way to make a TNG clip show than what they did.
Oh, certainly. There have been some excellent clip shows here and there, like The Adventures of Superboy's "Who Is Superboy?", which used the clips to catalyze a compelling two-hander where Clark Kent and Lana Lang confronted each other about their relationship, and Andromeda's "The Unconquerable Man," which ingeniously integrated the clips into an alternate-timeline version of the series with a different lead character to explore the road not taken. Stargate SG-1 did some fairly good ones like "Disclosure" where the frame story significantly advanced the story arc. Hercules and Xena used their clip shows as an excuse to go crazy with the frame stories, notably in "Yes, Virginia, There Is a Hercules," where the regular and recurring cast played comic caricatures of the show's own producers in a "behind-the-scenes" story whose premise was that Kevin Sorbo was actually the real Hercules pretending to be an actor playing Hercules.
Indeed, I often think that the poor reception of "Shades of Gray" not only motivated Trek's creators to avoid doing another clip show -- instead doing money-saving bottle shows with minimal VFX like "The Drumhead" and "Duet" -- but inspired other writers to do their clip shows more creatively. I mean, "Shades" has a deservedly terrible reputation, but it really wasn't any worse than a typical clip show up to then. It was normal for clip shows to be slapdash and disposable, with frame stories that were just half-hearted excuses to set up the clips. The only reason "Shades" felt so much worse was the contrast with TNG's usual writing, which -- even in seasons 1-2 -- was smarter and more sophisticated than the average action-adventure TV show of the day.