I see no real problem with Dreamer as champion right now. Is he helping the "prestige" of the belt? Not at all. But he's not completely killing it.
Dreamer as champion works because for some reason, he's over with the crowd. Don't ask me how or why, but they do like the guy. If he weren't, it would be a massive failure, since he's not the type of person you can bank on, nor can you expect him to have a great match. He's slow, old, generic, and pretty much bland on every level. But somehow, he's found his niche, and having him as ECW champion isn't all too bad of an idea, especially since it boosts his own credibility. This allows anybody who beats him to look much better in doing so than when they would beat him a few months ago.
For instance, let's take a guy like Zack Ryder. If Ryder were to beat Dreamer right now while he's holding the title, it would put Ryder in a much better limelight, correct? What about if he were to defeat Dreamer from July 2008? It would mean less than if he would defeat Jimmy Wang Yang.
Then there's the issue of the small roster. If you were to give the title to Christian right now, he'd be holding it for nearly a year straight. Who is there for him to feud with? Christian/Kozlov can't last long at all since Kozlov is such garbage, and Christian/Regal isn't really going to last for 5 months. Christian/Shelton is their best option, but even that wouldn't be able to last half a year. People would get tired of Christian just going through every heel on the brand and keeping the title for 10 months or so. At least with Dreamer holding the title, we know he's going to lose it soon, but afterwards, he'll still be able to challenge someone.
If Dreamer were to hold the title much longer than Summerslam, then yes, it'll be a bad choice. But for now, Dreamer works while they're reestablishing these guys on their new brands and trying to up the younger guys. Don't be surprised if Dreamer is left off the WrestleMania card completely, but don't be surprised if he isn't challenging for the ECW title at the Royal Rumble (and losing) either, as he'll most likely still have enough credibility to do so because of this title reign he's currently in.