I completely agree. The only statement ever made that really comes close to justifying this badges is this:
It encourages you to ask questions even if you think they are a little out of the mainstream. In this regard it is a positive thing, though not something I would be too excited about.
However, it goes both ways. It also encourages users who make poorly worded and unresearched questions which yes, can sometimes borderline the "too localized" threshold, to continue making those questions. Looking through the list of questions which receive the badge, the majority that get it have horrible titles that don't attract the attention they need.
Sure, a new review section could fix the issue. After all, these questions do need better titles. However, if the titles get improved to the point where they will attract visitors and the review panel works as expected, then the badge will only ever be awarded by those questions which are unfixable.
We should also note that a lot of those questions which receive this badge and are from 1-rep users are also first questions, and already appear in the review panel. So obviously reviewing them doesn't always help the question in the first place, especially if no action is taken where action is needed.
This badge is just as much hurtful to the community as it is helpful. Badges are not meant to be a "reward" from the system because the community didn't notice your question; they're meant to reward positive behavior. It doesn't follow the standards of badges to help encourage positive behavior, as it can encourage both good and bad.
It should not be the community's responsibility to fix someone else's question, and we shouldn't reward them in any way for the inaction of the community to fix their question.