I think it's the visuals that are the only thing that pushes this into the watchable category. Everything else sucks but the visuals are A-grade. The hammy acting and cheesy lines helps though, you can't help but laugh at how hammy the whole thing is.
That's another thing, a good "bad" show could be one that makes you feel something. A merely mediocre show might just bore you, but one that is monstrously bad will make you feel a slew of emotions. Negative emotions, but at least your feeling something, and that can make it more immersive.
School Days is a prime example. Plenty of people talk about how they hate that series, but I bet they remember what happened in it better than a lot of the "average" series that they've watched. One reviewer on youtube I saw originally gave it a 1/5 because he hated the characters, but years later did a follow-up review saying he'd thought about it, and that the anime itself was not that bad, and it achieved it's aim, which was actually to make you hate the main characters.
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Mahouka has set a new standard for me. Previously I've watched hyped action series that score low critically, like SAO, Valvrave, Index etc. But in each of those I've thought "not really that bad, I can see why people like this and it's enjoyable if you overlook the plotholes". But for Mahouka it's literally the first time I've really felt "this is just all-around horrible and anyone who actually likes this is a retard".