Scott's Tots is perfectly in character, it's absolutely something Michael Scott would do. He routinely does things with what he believes to be good intentions only to have it blow up in his face. He's a naive doofus that's completely out of touch with reality and because of that he constantly says and does things that are stupid and potentially harmful to people around him, but deep down he means well and all he really wants out of life is to be liked/loved. He's such a good character because the audience is supposed to like AND hate him. One minute he's ruining a Christmas party because he didn't want a hand knitted oven mitt from his secret Santa, the next he's the only person from the office that shows up at Pam's art show. He was extremely well written.
The worst characters on the show were Nellie Bertram and Charles Miner. I can't stand either of them. I like every episode of the show, even the later ones, but if I had to pick a least favorite it's Dinner Party. I really don't understand what people see in this episode, especially to the point of considering it the best in the series. Yeah I get it, it's supposed to be uncomfortable and make you cringe, but it's not the only episode of the show to do that. I just find it boring, honestly. None of it takes place in the office. Most of the minor characters aren't in it, and everyone besides Michael and Jan are just kinda there. I don't see the point in having an entire episode dedicated solely to the fact that Michael and Jan have a dysfunctional relationship, we already knew that and to me the dinner party feels like it's being shoved in our face just in case we somehow didn't pick up on it already. It's a watchable episode to me, just not a good one. At least Scott's Tots had the amazing side story of Dwight trying to sabotage Jim with the employee of the month scheme if the main plotline's cringe didn't do it for you. Dinner Party had nothing else.
Also, the most ridiculously stupid Michael Scott moment in the entire series was the "vasectomy, reversed, another vasectomy" bit from Dinner Party. As ridiculous as his character could be, and of all the dumb things he did during the course of the show, that's the one that made me roll my eyes and groan. So awful.