Barry,
I'm quite familiar with this opera, through the Davis and Dutoit complete recordings, and somewhat with the much-earlier pirated Beecham. I have also, an aircheck recording of the Metropolitan Opera production premiere of the work in 1974 by Rafael Kubelik, and I recall Milton Cross commenting enthusiastically during performance that it was unlike anything he had ever seen. Also, I've seen an orchestral study score of the work, and the writing is excellent in many parts, particularly the ballets in the third act. This is based on my familiarity of Berlioz with having performed in the past, his Requiem, the Te Deum, and an opera chorus concert that featured the Roman Carnival Chorus from Benvenuto Cellini. One of my big disappointments years ago was the choral group I was then with could possibly have become involved in a performance of Berlioz' Romeo and Juliet symphony, but the Orchestre de Paris decided not to perform the work on their visit to Washington, DC.
I remember seeing somewhere a long time ago, a comment in a Berlioz biography that Berlioz composed similarly to Mozart; that is, in a linear style. Also, Berlioz followed the recitative and aria format for his operas, though on a much-expanded style, for larger orchestra, as we obviously know. Les Troyens was no exception. Berlioz and Wagner knew each other, and Berlioz was familiar with Wagner's operas he composed prior to the Ring, Meistersinger, and Tristan. I also remember reading somewhere that Wagner played excerpts of Tristan to Berlioz, and it was said that Berlioz was "bewildered" by the music; though to what extent, I don't know.
Berlioz, being a classical romanticist in excelsis, was inspired not only by Shakespeare, but also by Greek mythology. The Aeneid, on which Les Troyens was based, is the work that stuck with Berlioz much of his life, reading it with his father in his youth. In later years, the Princess Carolyne Sayne von Wittgenstein (not sure if I spelled her name correctly), one of Franz Liszt's many women he had affairs with, urged Berlioz to take up composition of Les Troyens, telling him that it would be his crowning work in glory. Berlioz resisted initially, saying that if he were to compose the opera, it would never be performed. But the continued urging by the Princess caused Berlioz to give in and to compose the colossus it is. What might seem to listeners that Les Troyens isn't a "through-composed" work is because it is a series of happenings/scenes based on a specific already-written work. Don Giovanni was based on a legend, and Mozart was fortunate to have a genius librettist in da Ponte to write the libretto for it. How more lucky can you get in having da Ponte as your librettist? Berlioz had to compose his own libretto for Les Troyens, and that might be the primary factor which weakens the work.
In the past, whenever Les Troyens was performed, many conductors made considerable cuts to shorten the performing time. Conductors were scared that it dwarfed anything that was composed by Wagner, in terms of length. Even at its premiere, Berlioz was forced to sacrifice the first two acts (the siege of Troy) and stage the next three acts as "The Trojans at Carthage", with an overture that he was forced by artistic reasons to compose for the premiere. These fears were unfounded, and as it turned out, Les Troyens is shorter time-wise than Meistersinger or Goetterdaemmerung to perform complete. The problem in performing Les Troyens is 1) having enough money to stage it, as it requires elaborate sets and costumes, and 2) a stage large enough on which to perform it according to Berlioz' intentions.
Now, on to your questions:
First, it all depends on what you consider to be "bad" musical content. Yes, Les Troyens has its share of weak spots in composition. Note my earlier comment about Les Troyens being composed based on an already-written work vs. a legend. Wagner's operas also have their weak points, as I'm sure you well know. There also is the problem of audience familiarity with a given work. Obviously, Wagner's operas have been performed considerably more than Berlioz'. And most audiences have more of a problem with opera sung in French than German, though that doesn't keep them from coming to the opera house in droves to see/hear Bizet's Carmen.
Second, it is difficult to tell whether or not Mahler would have been a fan of Les Troyens. He and so many other conductors during his time were swept away by the phenomenon of Wagner, with his concept of music drama, leitmotiv, etc., etc. Other than Italian opera (Rossini, Verdi), Mozart and Wagner were the composers during Mahler's time to go to in opera. I've read in Henry-Louis de la Grange's Mahler biography that Mahler performed the Symphonie Fantastique regularly and attended a performance of the Requiem at one point. I know of no other incidences of Mahler performing Berlioz' music, and have seen no evidence that he disliked Berlioz' music. Where did you see that Mahler was a fan of La Damnation de Faust? I think the problem was one of Mahler's inaccessibility to Berlioz' music. By the time Mahler gave any concerts in France, he was so busy with his own compositions and conducting concerts/opera, that he probably didn't have time to study any other Berlioz compositions while there.
I suggest that if you have access (borrowing privileges) to a college library that might have a recording and a study score of Les Troyens, check those out and give the work a listen/study. The Davis recording is the preferable one, if you find choices. You can then make your own determination whether or not the musical content of Les Troyens justifies it length.
Wade
P.S. - After typing all this, I'm reminded of a scene from a "Star Trek: The Next Generation" episode where Commander Riker comes into Captain Piccard's quarters and happens upon Piccard listening to an opera aria. Riker asks "Bizet?" Piccard answers "No, Berlioz". What you hear was Hylas' Song from the fifth act of Les Troyens. Hylas was a Greek sailor stuck at Carthage and was singing about his being homesick for his native land while Aeneas is involved in his passion for the Queen of Carthage, Dido.