Having Batman's younger version of his rogue's gallery I think complicates the show even more since I don't they they are interesting enough (exception Penguin) to stand on their own and the show has committed to making this about Gordon so they have to tie into Gordon. If we were comparing it to SHIELD, it would be like that show had the main Avenger villians in it without any of the Avengers. This show's ultimate problem is it's main focus character (Gordon) just isn't good (whether that's a result of writing or acting or both).
Yeah, and I think a lot of the problem is their hands are tied in many respects when it comes to these villains. The first episode, when Gordon was ordered to kill Penguin, it had no tension, because we knew the Penguin wasn't going to die. He can't. We know Batman faces the Penguin someday, so Penguin has unlimited plot armor from here until the end of the show. And really, even with the villain they created for the show, there really aren't many ways they can go. If they stick to Batman canon, Falcone isn't going anywhere. Fish can't take him down, because Falcone and Maroni continue to have a stranglehold on Gotham until Batman is created. Fish is really the only major character whose fate we don't automatically know, so they might as well just have her wearing red shirts.
One of the most difficult things about doing a prequel - which is effectively what this show is - is people already know the ending so it's really hard to have any surprises. Look at the Star Wars prequels: They kept putting Obi-Wan and Anakin in these dangerous scenarios, but so what? We know they live to fight another day.
Really, as much as I like the character, one of the best things they could've done with this show was actually having Gordon kill Penguin. It would've shown from the very first episode that no one is safe and that this is their won world and they aren't playing by the rules. Instead, they basically just reaffirmed that Penguin will never be in any serious danger and will always get out of whatever situation he finds himself in. Same with Gordon, Harvey, Catwoman, Edward, Poison Ivy, Bruce, Alfred, etc.