No, his other underqualified picks look more like incompetent/botched favor trading than anything else. He didn't negotiate the Grand Bargain because he was in mental decline, he did so because he's a fool who overvalues dealmaking.
Anyway, Biden isn't better acquainted with Austin than he is with Flournoy and Johnson, the latter served with him in Obama's cabinet. From what I’ve recently read, Austin seems like an overcorrection to the things Obama had to deal with when Gates was SecDef. Austin’s considered deferential and non-ideological, so Blinken and Sullivan will more power to shape foreign policy. I'm really curious about the differences Biden/Blinken have with Flournoy and Johnson because that alone is kind of pathetic.
To me, the Rice pick reeks of garden variety nepotism to keep her around and help boost her profile in case she chooses to run for something down the road (recall the rumors of her challenging Collins). His affinity for her is the only reason she was being seriously considered for VP.
As I subsequently stated, I think it's both. Everyone you've mentioned, including Austin, is in the inner circle. His entire case for picking Austin is that he's known the man for the past decade.
Why I Chose Lloyd Austin as Secretary of Defense
He's basically given the same rationale for all of his picks. "I know these people." Your point about the other candidates being Flournoy and Johnson shows he didn't really even consider many people from outside his inner circle. Klain, Richetti, Blinken, O'Malley Dillon, Sullivan, Deese, Rice, Kerry, Donilon, Yellen, Psaki, Granholm, Austin, Vilsack, McDonough, none of these are faces Biden hasn't been intimately familiar with for the past 10 years. I think a younger man would have had the energy to look outside the clubhouse a bit more. Can't teach an old dog new tricks.
The Rice pick is totally absurd.