I think I watch the Olympics/Commonwealth Games differently to you guys. I'm always on my laptop or doing other things while it's just on in the background because for me, other than the odd event, they are not must watch and I don't mind missing things given it is free. The adverts are fine because there is no way you will ever get me to pay $80 for a two week event that is on in the background (not including Sky's installation fee and you still have to pay for an HD ticket...). Usually the Games are not even on at peak viewing times so that's an even larger waste of money.
TVNZ are doing a good job although I agree, using Lightbox or offering a pay service online would strike a nice balance offering ad-free mutli-event coverage. I'm disappointed with TVNZ's Apple TV app not updating with a dedicated page for the games. The BBC did something similar with the iPlayer which I watched.
Did anyone remember Sky's FTA effort for the Olympics? It was rubbish and I ended up not bothering with Prime (or the Olympics at all for that reason). They didn't even make an effort to cover NZ athletes competing live.
Personally, I did not think the opening ceremony was very good and it had quite a few techinal errors throughout. Have noticed it with the events too.