Wall of text incoming.
Alright, first off, let me say that i expected a raging combative post to what i posted, and i must say kudos to you for actually genuinely wording a post in such a respectable way. Thank you for that, and i will do nothing but reciprocate that and explain why your perception of Bollywood in it's current state is largely wrong. And i bet those "bollywood > Hollywood" people are on Youtube? Yeah. I'll admit that a lot of people seem to harbour the "BOLLYWOOD OR DIE!!!" mentality, whem Dhoom 3 borrows elements from The Prestige & Now you see me. Also, might wanna take down those hindi swears, they're kinda nasty ones, lol.
Let us start about the budgets. The budgets of ALL action films here are freaking insane. Definitely no low budget stunts, though one can get the impression that budgets are pretty less because the box office collections of these films almost dwarfs the budgets alone. Let us take a look at the 3 most recent action films. Keep in mind though, i'm presenting you these stats in USD and not in RS. Keep in mind that the exchange rate is about $1 = 60 RS. So, while the budgets of films given below may seem low to you when compared to say, The Avengers, convert them into rupees and you'll realise these budgets are MASSIVE.
1. Dhoom 3 :
A)Budget - About $24million
B}Box Office Collection - $81 million
2. Krrish 3 :
A)Budget - $18 Million
B}Box Office Collection - $63 million
Now. As for eye wateringly embarrassing bad? Hardly. Dhoom 3's visual effects are stellar. Ten minutes into the film, you may be going "hey, that's impossible!" and then half an hour later you will most likely have chucked that notion, because they are well executed/I really mean this, and as someone who has seen plenty of crappy CGI effects i can vouch for how well they are done. Are they cheesy? Maybe. Krrish 3 is a cheesy Indian super hero film, full of so much cheese that you can actually call it Mozzarella. But are the visual effects of really good quality? Yes. (though in some sections they are a bit below standards). Krrish 3 is particularly impressive as all it's effects are done in India itself (allegedly). The action films all of high quality visual effects, there is no doubt about that. At least on par with Hollywood.
Dhoom 3 upto a point is "woo look how crazy we are". It's only when the twist comes that the plot holes begin to gnaw at you. And that is a flaw of the script, not in Bollywood in general. Your point about "the rural villagers not understanding a whole lot is going on" is virtually non existent. Dhoom 3 is not made for this type of audience, and i bet it's not where it gets it collection. 'The rural areas' i would say is a wrong term, rather regional areas would be better suited, for many regions (which have small timje villagers and farmers) have their own small scale film industries, and while the rural people are often willing to watch the big bollywood titles, the big bollywood titles are hardly EVER catered towards them. There is the Bhojpuri film industry, which is catered to people who speak mostly Bhojpuri. Then there's the Bengali film industry, catered to those who speak Bengali and English as well.MAJOR films like Dhoom, Krrish, Ek Tha Tiger have relatively simple plots, not because the villagers will have a tough time figuring it out, but because of many other reasons like producers not wanting to take risks and lose money. 'Bollywood' isn't the only film industry in India, it's simply the largest. Think of it as the Joker. He is Batman's most well known villain, but batman's rogue gallery also has relatively unknown villains as well. And so it is with the Indian film making industry. Hell, we even have one for the obscure, north eastern states in India that are located in very hilly surroundings.
"It's not a musical". Truth be told, i do not know how to explain this, but i will say that the songs aren't random. Like as you mentioned, as song can't just happen anytime, like in the middle of a shootout. No, as movie bob described it, indian films are never bound to genres, at least the big ones. The songs happen with context, and not just randomly. There is one shoe horned song in Dhoom 3 which i don't why exists, but the other songs are justifiable. one of the songs is a musical act, opening for their circus. The other one happens when Katrina Kaif (the girl in the white T Shirt) is soing an audition for the circus. The third one is the recurring theme of the series, and is merely there while the credits role. One song is shoe horned, i'll give you that.
A lot of the songs and their sometimes unnecessary presence in Bollywood films can be narrowed down to 2 reasons -
1. The audience expects songs, and the producers are too chicken to not do it. It is an unwritten rule that the Indian audience demands a song. And producers are compelled to deliver. And as a result you have lots of decent films with terrible songs, and vice verse. Part of it is because Indian films are a mix of everything. Happiness, joy, sorrow, love, comedy, all of these things are expected by the audience in a single film. That is why you won't really get films like The Departed here, which strictly adhere to a tense tone. The audience expects to get serious when shit goes down, laugh during breathers, and feel attached to characters during the climax of the film. And the films largely deliver on these through songs, songs break up the pace, too much action and the audience just gets bored.
2. There is little to no significance of Albums here. The songs that do well, are about 96% from films itself. You can ask a prominent singer to do an album, promote it and what not, chances are - it'll still fail. So, singers without these Bollywood songs would have an incredibly tough time. i'll admit i've seen MANY shoe horned songs here and there, but Bollywood songs are a huge way to give exposure to the singers - if you're a new singer with a catchy song, you can either try for an album or go for a film. And the film is the best option because the amount exposure it nets the singer is incredible. This year only i have heard songs from new singers in films, that i would be unaware of if they weren't there in the first place. And now they are riding a huge success wave, with concerts and whatnot.
If i haven't explained this well, i apologize.
And adding on to the romantic films. You said the reverse : Romantic films here are low budget, and while they aren't churned out by the hundreds, they do appear quite frequently. As for them not being substantial is flase, again you are viewing the film making industry in India as only bollywood. There are many, many substantial small time films that are critically acclaimed here. The problem is that no one really gives a shit about critics in India. we have film critics, and they dissect and analyse the film, a very small minority agrees/disagrees, while a HUGE majority simply goes and wtach the films. The big stars also do not give a shit about critics, leading to largely 'masala' or commercial films that are BOUND to rake in huge amounts of cash.
That doesn't mean there are no good intellectual films here though. Barfi, while not exactly small time, is a great film. It's a touching story about a deaf and dumb man who falls in love with an autistic girl. The acting is really, really genuine and authentic. Then there is The Lunchbox, which is a story about how 2 people fall in love without never even meeting each other - a house wife accidentally sends her husband's tiffin to another man, and they communicate with each other through writing notes and attaching it to the the Lunchbox. Then there is Kahaani, a thriller mysetry that remains and sticks to it's genre, with great acting. The small budget film scene is REALLY big here. And occasionally we get really good, and different films. This is not to say that romantic films aren't good as well, many of them also explore different themes, and do well. Romantic films also, are rarely churned out at shoe string budgets. No one makes films just for the purpose of making them you know. A lot of check boxes need to be hit before a film takes off properly.
As for indian comedies, you are right, that no foreigner can truly get any of them, really. There is a lot of juvenile humor too, but you ned to be a part of the culture and know about the nation before actually getiing the joke.
Whew, did i forget to address anything?