Yet again, he gets undone by his scheming wife. Also too, he handles the reins with heavy hands. When the Cylons attacked the twelve colonies, he would have gone back. When Adama was shot, he declared martial law, taking down the civil government. He certainly has the guts to make the tough calls, but he'll bite off his own nose despite his face at times, meaning his command lacks balance.
There is a lot to be said for those matters. Not all of it was Tigh's doing. You'll notice that in this season, Tigh isn't drinking to the extent that he was in the first two seasons. Notice that when he's not drinking (reference the episode '33'), he's a damned effective officer. Noticed how he kept his head, and calmned down Chief Tyrol in last evening's episode?
If you noticed in the Mini series, Adama was also hell bent on going back into the fight, and didn't change his mind until he was watching Dee and Billy interact in the CIC. Tigh didn't have the benefit of Roslyn 'splainin' the situation to him. The chaos of the civilian government was a $#!t sandwich that Adama left him before he got shot. Adama had already pretty much taken down the civilian government.
All that said, you're correct in that Tigh is the kind of guy that you want to keep in a cage until the time comes to let him out of the cage, and let him do what he does best...kick ass, and take names. We've had people like Tigh in our military, and they did need to be tightly controlled. It was probaby in the best interest of America (for example) that Patton died shortly after the war ended.