I wouldn't say foolish as much as impossible to maintain for a company other than the Intel mastodonte - that can still force its half-baked products down resellers' throats (see: Dell & all) considering it performs well enough - as in, it could run i386 code (they weren't strong enough to force Itanium though).
No, I think it has more to do with bad design choices at the time: Intel didn't believe in SDRAM and wanted to promote Rambus, which worked better at very high frequencies. For that, the P4 actually made somewhat of a sense - and, had they managed to impose Rambus serial RAM as a standard, they may have raked in the big bucks.
They did however screw that up, refusing to consider that SDRAM actually had some oomph in it, and that DDR actually solved the throughput problem.
This led to either costly Intel P4s (Rambus cost a lot and required tricky assembly: fill all the memory slots...) or buggy SDRAM chipsets (remember Memory Translation Hub?). When Rambus got down screaming and kicking, Intel was then stuck with an ill-matched core that needed to be squeezed for all it was worth, and they gave all powers to Marketing to sell what they had - and Marketing took it and ran away with it.
Results: slow, overheating, power guzzling P4s inundated the market; users were (mis)educated on MHz=Power; Rambus made as many peeople as possible miserable (I mean both the tech and company here); Intel got stuck on a chip design that they couldn't scrap following all their mistakes (blundering the P-III, screwing up the 440BX successor, ignoring DDR, forgetting graphics chips, the Itanium...) without completely loosing face.
What d'ya think?