I think, if anything, the Rule of Two was effective in the sense that it allowed the Sith to sew decent into the ranks of the Jedi and the republic more efficiently.
I say this because in the timezone the TOR is set in, there are plentiful Sith. As Sith seem to spawn like maggots, the Jedi had a clear enemy and ample opportunities to strike deadly blows against the foundations of the Sith occult. However, with the introducution of the 'Rule of Two', deceit - paranoia - and general chaos could be spread within the shadows.
A couple of Sith are harder to spot in a Galaxy, especially when their methods are to subjugate and to sew the seeds of chaos.
A band of roving Sith, who slash first think later, is a problem - all be it tangibly paradox - with a clear solution.