i can think of a couple of angles to look at "over-produced".

one is when the production gets in the way of the music. any information has both form and content, and it's the form that first gets your attention and says "hey, there is some information in here if you check it out." these two levels are needed, because the content can't advertise itself if you haven't already noticed it. having the first sentence of a book read, "this is a book" wont help. you have to recognize that it's a book by its form, then start reading. when we put too much effort into the presentation of our music, and not enough into the music itself, it's like making a beautiful leather bound book with a lame story inside. we pick it up and look at it before we pick up the ratty paper back, but inside we find story that doesn't have much to say.

the other thing i can think of, is that when a genre as a whole is really well produced, it makes it much more difficult and expensive to break in. look at hollywood movies. you can have the greatest screen play ever written, but if you don't have millions of dollars and decades of experience, your independent film will never be comparable to hollywood. it makes it a tough go because people will naturally pick the shinier product, and once the bar has been set, production that isn't up to par gets over looked. in such a market, nobody gets to work their way up. either you are on the inside, and know the "trade secrets" or you are on the outside, and your art is marginalized.