Valve's main objective was probably to replicate the keyboard/mouse combo rather than improve or alter the standard joystick gamepad (like the X360 Controller). In the end, it looks like a controller halfway between these 2 types of input.
The main problem with a controller-based "mouse" (and it shows in the video) is that you control the cursor with only your thumb rather than your full hand gently set down on your desktop. I guess we'll never obtain a perfect alternative to the mouse. And the Steam controller will probably leave both joystick users and mouse users somehow frustrated because it tries to be both at the same time. But considering the variety of Steam's library, it was probably Valve's only solution. Anyway, like this comment, everything still remains speculation until you've tried it yourself (for a reasonable amount of time).
The main problem with a controller-based "mouse" (and it shows in the video) is that you control the cursor with only your thumb rather than your full hand gently set down on your desktop. I guess we'll never obtain a perfect alternative to the mouse. And the Steam controller will probably leave both joystick users and mouse users somehow frustrated because it tries to be both at the same time. But considering the variety of Steam's library, it was probably Valve's only solution. Anyway, like this comment, everything still remains speculation until you've tried it yourself (for a reasonable amount of time).