EU261 is certainly nice for pax affected by delays/cancellations - I say that as someone who was reimbursed several thousand bucks after getting stuck in Europe due to the Icelandic volcano eruption in 2010. However, despite being a beneficiary of the EU rules, I don't think they are reasonable. What objective reason was there to force an airline to pay for accommodation and meals for myself and my family for a week in that situation? It was completely outside the airline's control. Nonetheless, I had to pursue the airline, as travel insurance would not pay up, on the grounds that the airline was liable. The other strange thing is that the compensation is not in any way linked to the fare you pay. For example, you could have paid EUR20 return for a short flight with Ryanair, but then get cash compensation of EUR250 plus accommodation and meals if there is a delay/cancellation.
The fact is, the EU rules impose an additional cost of doing business on airlines, which ultimately all passengers pay for. In some cases, this is explicitly clear - e.g. Ryanair imposes a surcharge of EUR2.50 per flight to cover these payouts. Full service airlines (to my knowledge) have not done this, but obviously those airlines are either paying extra for insurance and/or paying out their own cash to provide compensation, and that extra money has to come from somewhere.
I know affected pax feel a bit better as a result of the compensation, and I guess most other people probably don't realise they are subsidising the compensation payouts for others, so maybe this works reasonably well overall. I'm still not convinced the EU rules are particularly fair or reasonable though.