Actually, Ra's developed his admiration for Oliver during the fight that Oliver lost, and the overall reasoning for wanting Oliver around ever was as strong there as ever. And in the end Oliver was all "My name is Oliver Queen." So they showed that Ra's didn't get what he wanted, but the fight wasn't satisfying because we know that Ra's wasn't broken by that fight. The solution is: you have to build him up to have something *to* break. If Ra's never gets what he wants, he can't lose in a satisfying way. If he's always been losing, a final loss isn't climactic. To have a good bad guy, they have to make the good guys lives really suck, and Ra's didn't really do that very well.
Great stories often sound uninteresting when we describe them: "Guys invade a rich guys dream to trick him into signing some papers" sounds boring, but... Inception. The power of an idea is in the execution. Hearing people say "I'm not interested in a storyline that involves X" may sound like a reason not to do it, but unless we examine what triggers that disinterest (is it what will actually happen or what the audience incorrectly assumes will happen?) and what is lost by not pursuing the new angle (is the disinterest in this new storyline comparable with the disinterest in th same old same old storyline?) then you can end up losing big on both ends.
Ra's wanted Oliver to replace him because he survived the fight (and in fact, there was a legend about that very thing). If Ra's just tore him a new one, whisked him off to Nanda Parbat, and revived him so he could brainwash him and make him his heir, it would be a whiplash-inducing turn.
Then, on top of that, the whole idea of brainwashing your successor makes no sense. I mean, okay, there's a certain internal logic to the idea that this group hasn't evolved much in all of this time because it hasn't allowed any outside perspective to penetrate it, but Season 3 left me feeling that the League of Assassins was a completely backwards model for an organization that couldn't actually survive in real life. So I feel like (and this ties into my desire for comeuppance) someone should have pointed out to Ra's how screwed up his ideology was before the end of the season.
It seems like you're talking about what makes for a great villain in general. My position is that once Ra's established himself as an obnoxious presence, the only thing he was good for as a character (not a plot device) was seeing him defeated and humiliated. In that scenario, the more he annoys me by succeeding, the more he needs to suffer in the end to justify the annoyance with a big payoff. If he'd been defeated early on without having accomplished much of anything, I would have had satisfaction in the sense of, "Yeah, f*** that guy." Having him largely getting his way throughout the season only to kind of lose but also kind of win and die with a smile at the end didn't deliver a proper "Yeah, f*** that guy." So in the end, he was annoying until he was gone.
What I would have done (without changing things drastically) would be: Oliver pretends to be brainwashed, and Ra's buys into it and thinks he's winning (same as before). Ra's attack on the city fails more badly than it did. Oliver gives Ra's some lecture about how his failure was the failure of the League of Assassins and its entire belief system. He points out that Ra's didn't realize that Oliver was tricking him, but he also had no advisors, no one to point out when he was making a mistake. This ties into Oliver learning not to try to handle things by himself, which ties the season together more. He tells Ra's that he lost because his was one group mind working against several strong individuals, that the League is a dinosaur that has no place in the modern world. They fight, but it's not Oliver losing but coming back at the end and winning. His victory is more decisive, he severely injures Ra's, and then he gets shot by the police and falls down the waterfall.
Ra's gets away, only to run into Malcolm. Malcolm reveals that he poisoned Oliver's blade just in case he wasn't willing to finish the job. Ra's can barely defend himself between his injuries and the poison. Malcolm chops off his hand and takes the ring. He gloats that he's going to become the new Ra's and do things his way before finishing Ra's off.
Yeah, f*** that guy.