not a clean movie

You're big beef with MD seems to be that it's not "clean" as, say Wizard of Oz. Personally, I see it more like Brazil, but that's not really important.
I don't think the point of the movie was to be clean and wrapped-up and tied like other movies (<cough>Vanilla Sky<cough>). The dream is not just a dream, but is Diane's most raw feelings. I look at the dream scenes and say "why does Diane do this in her dream?". So, eventually, I get a full understanding of Diane's feelings through her dream. (The "llorando" scene in Club Silencio is so chilling and beautiful; I could feel Diane's love for Camilla through that scene.)
I think there is genius in MD. Is it perfect? No, and for the reasons you give. It is perfectly closed? No, but dreams usually aren't, and I think it's more closed than not. But what was Lynch going for? I think he wanted to create a character, Diane Selwyn, and describe her to the viewer through her dreams. In that, I think Lynch is a genius, and I think that MD is his best film.