My main problem with it is that it does diminish the Reapers, not only does it have them being constructed out of organic smoothie (why would an AI species who express disdain for organics do this?) but it also seems terribly inefficient (again, why would an AI species do this?). This might have been fine (but not really) if there was some notion that it led up to something but there wasn't any, at the end of ME2 we just find out that the bug proxies of the Reapers are building one with the essence of humanity (whatever that means) for no particular reason. It is the accumulation and avatar for the lack of story that goes on in ME2.
I don't have too much of a problem with it's design although I think it's a tad bit silly. The thing that actually bothers me the most about it is its three eyes.
I feel the reveals of the Reapers got the cart and horse mixed up. It was pretty clear that the reveal that Reapers are People was supposed to be big and shocking... but it really meant nothing in the context of the plot as it was (in ME2), and even less in the future (in ME3, where everyone was getting a Reaper). On the other hand, the motivation of the Reapers, which was far more relevant to the supposed and intended themes of the story, were a last minute drop in.
Instead of mass abductions, the Collectors could have been the proxies intended to prepare the galaxy for the Reapers by promoting conflicts and divisions and sabotaging things so that the Reapers would face a divided galaxy. Trading technology to pirates in exchange for different things, supporting various groups (like the Batarians) with advanced technology to make the odds more even- in this context, Cerberus could have been chasing shadows of a conspiracy to get all the major conflicts started.
You can still keep the suicide mission, the loyalty missions, and everything else, but start dropping the clues earlier that the Reapers apparently have a real dislike of synthetics. Arming the Quarians, unaccountable changes to their MO when synthetics are involved, whatever. Then our big reveal in the finale isn't that Reapers are Soylent Grey, but rather the whole 'saving the galaxy from synthetics.' The Collector Base could be, oh, a repository of galactic history of something they keep as a monument about the perpetual threat of synthetics they are to protect us from.
That way we can end ME2 with a misleading impression that the Reapers are super-synthetics that think they are protecting us from synthetics by destroying us before we can make synthetics that can destroy us. Malfunctioning machine theory, in other words, while also explaining why they wait for each cycle.
Then, in ME3, we could go to a harvesting center (a big mystery), realize the truth, and then we realize they are us and the whole conflict between synthetics and organics takes a new twist well before the finale.