Actually, I've been thinking about that. The reaction seems to be: Babcock/Holland aren't using the best players, and that means they're crazy/illogical/just plain wrong.
I think what Holland means to do is develop his players mentally. So when he puts a lot of hurdles in the way of somebody like Nyquist or Jurco (and he really hasn't put many hurdles in the way of Jurco), people look at that and think that Holland actually believes that Nyquist isn't better than somebody else on the roster. But what he's really doing is trying to make it harder for those guys for development reasons.
If you read some of his interviews from this summer, it sounds like his primary worry with prospects is that they won't be mentally ready. He talks about kids who come up, look good for a few games, fizzle out, go back down to the AHL, and lose their confidence and really struggle. So if you view avoiding that situation as Holland's #1 goal, then I think his decisions make a little bit more sense—they're at least not as outrightly illogical as they might seem otherwise.
We say: Jurco is ready! and Holland says: yeah, but is Jurco ready forever? (I actually think he is, but it isn't a given!) and that's sort of a distinction we don't seem too worried about as fans. Hell, I mean, look at Ryan Sproul, who I think might be the poster boy for this. A lot of us want him up, but he is absolutely not ready in terms of his defensive game. So he could come up and score some goals, but look like **** defensively, and then he's going back down, and then he's losing confidence, and so on.
I'm not saying I agree with Holland's decisions very often, but it's kind of a ridiculous trope that he's being irrational about prospects. I'd actually say that he's being too rational for our taste. We want the exciting stuff now, and we're willing to take a risk. Holland wants to wait, minimize the risk, and have it later.