1-build a committee that could grapple with the simple fact that we wanted way more space probes/telescopes/instruments/data analysis money than could possibly be funded.
2-Coming up with the decadal surveys allowed astronomy to speak with "one voice."
3-As with any such kind of document, clearly some will be displeased.
4-By keeping that work "in the family," scientists essentially rank the scientific importance of different projects, rather than having bureaucrats or politicians do it.
1-There's a subtle, but important point to keep in mind about this: the decadals are given an "expected budget" for the next ten years when they start. That's just a guess by whatever people are in the Office of Management and Budget at the time, and it does not reflect what is likely to happen, especially when you consider that there will be a new president and multiple congresses over that period.
It is common for people--including ignorant journalists--to respond to a newly released decadal survey by saying "It does not reflect budgetary reality." That's not really a valid criticism for lots of reasons, including that budgetary reality may change as a result of the decadal survey. In other words, the political decision makers may say "There is a really cool mission proposal in that report, we will give NASA more money to do it." Look at the Europa mission.
2-This is really important. Most people who are not experienced with space policy and science policy don't get this. The reality is that people in OMB and especially in Congress cannot get into nitty-gritty science details. So they want a method of simplifying it for them so they can make the decisions on what to fund and not to fund. THAT is what the decadal surveys do. They emphasize what the community as a whole thinks is most important.
3-Yes. I think that the mature ones recognize that just because they disagree with the outcome, that does not mean that the process is flawed. If your sports team loses, you don't say that the rulebook was flawed and needs to be rewritten. Now what often happens is that if somebody does not like the outcome, they claim that the group was biased and applied the rules badly. But you'd be surprised at how much integrity the people running these surveys can have. I've seen people argue against their own institution's best interests because they have a sense of what is best for the community. Just because a JPL person is involved does not mean they will represent JPL's interest (that's why there are closed door deliberations, so people can speak freely).
4-Yes. Exactly. And when you do this over a long enough period of time (astrophysics has been doing it since the 1960s), you create an expectation within the community that if you want to get your project funded, then you have to convince your fellow scientists of its merit, you don't try to whisper in a senator's ear.
I could make a joke about how it is the worst system except for all the others, but I don't believe that. I have actually come to believe that it works remarkably well. It's not perfect, but nothing is. But I've never seen any criticism that includes a proposal for a superior method of getting space science projects funded in a democracy. In fact, the American approach is the envy of the world. Other space agencies (ESA, Japan, China) have shown interest in the American decadal survey process and may start emulating it.