Having the Initiative base be that large isn't a real problem for me, but having it located underneath a fraternity building in the middle of Sunnydale College was totally unbelievable. A facility outside of town would have made more sense, even if a large portion of it were still located underground.
Having Professor Walsh be the Big Bad of the Season would have been interesting on one thing because it would be the first time that Buffy would have to actually fight, and eventually kill, a human being. There could be a whole story arc where Giles had to explain to her and the Scoobies that there were actually circumstances, however rare, where taking a human life would be necessary. It could lead to a whole big discussion about Faith killing the Assistant Mayor wasn't really what she did wrong, but the manner in which she tried to put the blame on someone else was (or some other reason, whatever the writers could come up with)
Riley shouldn't have been so boyishly charming, nor should he have had such an easy time fitting in with college life if he was supposed to be an experienced, highly trained and motivated demon fighter. He wouldn't have to be as grim as the Punisher or Cable, but he should have definitely been more of a soldier and less of a frat boy.
Spike should not been as brutal and dominating of Harmony, or at least why she put up with it, and there should have been more of an explanation as to how they had hooked up, as well as how she became a vampire in the first place.
Willow's decision to stay with Tara, rather than go away with Oz, should have taken longer, at least a couple of episodes, where Willow actually struggles with the decision, unless it had been hinted at for some time that she might have had the beginning of feelings that way. That whole decision/consequences thing just played out too quickly.