As one of the most active players in the challenge (as you can see in the featured image) i totally agree with you on the lack of depth and thought that the challenge has generally produced, but also this sort of utopian fancy design is seen all over dribbble not only throughout the challenge and in many degrees of exaggeration.
The real reason why i decided to start the challenge was not to show my problem solving skills, i doubt i can do that in a 400*300 shot or in one single day. The real reason was the commitment to take some time everyday* to make and ship something no matter how busy, tired or lazy i would be that day. Beside that this challenge is perfect for people who like myself iterate forever on the design part and have difficulty shipping as they fear imperfections.
On the other hand the reason why you would take such a challenge and the amount of thought behind the work varies from designer to designer, some seek attention, others like to experiment and some other just follow the trend. Personally, beside not missing a single day, i try to get as much data in the mockups as i can to make it a bit more challenging and i’m very conscious when things get a bit too fancy, since i’m a developer as well, but as i said before some days you have to just to let it go and make the best out of the time you have.
Taking this challenge and posting every day on dribbble doesn’t make you a better designer but it surely makes you a more committed and flexible one.
As for your #fixui proposal, it seems quite interesting, maybe we should make a list of these old sites, redesign one of them each week and post here on medium the case study and process behind it :)