My reasoning is that he lost in a state that always votes for republicans.
He is too far off the edge even for them.
Before the accusations, he was leading by 20% or more. If he was leading by 20% or more, does this not in fact make him an excellent candidate?
He didn't lose because of being "off the edge" as you describe, he lost because the Democrats accused him of being a child molesting rapist, and the Republicans immediately spread and amplified that accusation while urging people to vote for someone else.
Therefore, he lost because of the attacks against him, not because of any inherent flaw he had as a candidate. Therefore he was not a "bad" candidate despite so many people constantly parroting the establishment claim that he was.
The establishment always claims real conservative reformers are "bad candidates". This is usually after they have back stabbed them in some serious and damaging manner, such as when Mitch McConnell and his cronies ran the racist attack ads against Chris McDaniel in Mississippi.
Establishment organizations are always damaging candidates and then declaring them "bad" candidates. Was Joe Miller a bad candidate in Alaska? Who won that? Wasn't it the establishment candidate that won it?
Washington DC doesn't want reform candidates, and they do everything they can to stop anyone from rocking their money spending boat.