It is a lot overrated. Part of the reason is that there are so many poor Star Trek movies.
I was being nice.
If you are to compare it to all of Star Trek, it is certainly way up there. Personally, I believe there are far better entries in the 13 films made. But you are correct. If we, as Star Trek fans, use this as the end-all, be-all template for what Trek should be? Well, its no wonder we've had more poor entries than good ones.
As a Star Trek adventure, Wrath of Khan is a perfectly serviceable story with some flaws. It bothers me greatly that Kirk and Khan never meet face to face. Its relatively low budget shows off in spades and has a film in that regard has not aged well. The acting in certain places could be better (although I think its the best we've ever seen Shatner's Kirk).
If I were to look at it on its merits alone as a film: it lacks scope, ambition, the performances are weak, the direction is uninspired and it looks like it was made on a TV movie budget (of its time) with recycled shots (both true) and has script problems galore. If I were to compare it to other films of its time? Its not very good.