I'm not in the business to watch out for the dealer's a$$e$. They are big boys and they can look out for themselves. They could opt out (and a few did) if they thought the program was too much bother.
Could the government have done a better job with the paperwork? Yep, no quarrel there.
As for drying up the used car market, at least in this area the used car market had already dried up long before. Dealers were not selling new cars and there were few trade ins. Prices were already through the roof. I have seen the "clunkers" on the lots and believe me not many would be useful for anything.