The problem with the "treadmill of mediocrity" argument is that it is a self-fulfilling prophecy, because it is only ever used retrospectively, when a 50-ish win team has failed to advance. But it is a worthless label because it isn't prescriptive at all.
In fact, historically, teams are more likely to win a championship (or their conference) after being in "the treadmill" than coming from the lottery. Seriously, look at most of the recent champions, and at those team's records in the seasons leading up to their championship. Our 2008 Celtics were the only one to get there from the bottom.
The Heat had been a perpetual 40-50 win team since the 90s, with only occasional blips (2001,2002). Then they got D-Wade and won a ring … and were on the treadmill until Lebron came and they win two more.
The Mavericks had been on the treadmill. They had won at least 50 games for 10 consecutive seasons leading into their championship run.
What about Dwight's Magic squads? Never won the ring, but made it to the finals. Were they a treadmill of mediocrity, too?
(Also, on a slightly different note, people really underrate the mid-aughts Detroit Pistons. 7 consecutive 50 win seasons, 1 of which was a 60 win. 1 title, 1 finals loss, 4 conference finals losses. If just one of those conference finals had gone differently, even if they don't win the title, we think about that era differently).
But anyway, my point is that the "treadmill of mediocrity" argument is inherently meaningless, because we cherry pick our evidence to support it. We say things like, "Well, if you ignore the Lakers, the Spurs, and all the other teams, and look just at the Atlanta Hawks with no context, it's true."
And this is without even getting into the argument about how playoff series (even first round exits) make NBA teams a LOT of money, and get them a level of exposure that can have many long term off-court effects for a team (including attract free agents).