The primary purpose of introducing the Gamma Quadrant was to provide some sort of strategic interest in Bejor via the wormhole. By making Deep Space Nine into a crossroads - a focal point for inter-quadrant exploration, and possibly trade - it allowed the stories to come to them, rather than having to go to the stories. Without the GQ - and without the Wormhole - you'd have to invent some sort of new strategic reason for Bejor being important. Not only that, but it would have to be a brand new reason, because the Cardassians aren't going to abandon the Bejoran occupation in that case.
I think The Dominion was a good idea overall, but I think the decision in the later seasons to show it as nothing other than The Founders, Vorta, and Jem'Hadar was a mistake. Yes, I understand that the other races in The Dominion were effectively subject races, with little role in administration. However, The Dominion was explicitly set up as being an "anti-Federation" - a union of many disparate races which was opposed to The Federation's ideals. I wish they kept with that concept. But in terms of other Dominion races, we only really ever met the Karemma (who functioned as traders) and several groups of refugees. It would have helped flesh out the GQ more if we had run into a few other Dominion races, even if they weren't given "plots of the week."