The fact that anyone would even think about appointing him highlights one of the biggest problems in the Israeli political system. The problem is that ministers are appointed based on politics with no check on qualifications whatsoever. How can you appoint someone with no diplomatic experience as Foreign Minister? How can you appoint someone who knows nothing about finance, Finance Minister?
The one thing that Olmert did right is appoint Friedman as Justice Minister. Whether you agree with him or not (I happen to agree with him), he is a professional who understands the legal system and can actually make things happen. In addition, because he is not a politician he can actually do things without worrying whether it will affect him politically.
The reason why nothing changes in Israel is because the Ministers are almost always completely unqualified and therefore are yes men to the ministry bureaucrats. Take Mofaz as Transport Minister. What does he know about transportation? Nothing. When is the last time he actually took public transportation or drove his own car? He has no ideas, no ideology and therefore did nothing for 2 years. The few ministers who manage to make changes are those like Friedman and like Netanyahu (as Finance Minister) who are actually qualified and have ideas and a direction that they would like to push.