The term "character development" may be a bit confusing but it does not have to literally mean seeing someone develop as a person a la "redeeming oneself on a second chance season" or whatever. It can be providing facets of a person that enables the audience to develop a better understanding of the individual, regardless of whether they grow as a person throughout the story arc or not. So, yes, the inclusion of the right footage counts as character development for the purposes of this discussion. See the term "development" as we the audience getting to see different layers of the character as time goes by. Those layers may always be there, the "development" is that they are shown and we get to see them.
This explains it better than I can (it talks about fiction but it is applicable to editing of reality TV shows):
http://www.ohio.edu/people/hartleyg/ref/fiction/character2.html
And while some people may not like Spencer regardless, personally for me, watching Cagayan made a huge difference, as I said. I was confused about why so many people here (plus my boyfriend) liked Spencer so much in this season when to me he has yet to shown anything particularly remarkable yet in Second Chance. I only understood the appeal after watching Cagayan. And I suspect I would also find many of the other contestants less interesting had I not already watched their previous seasons. So, while I appreciate this season, I don't think it is beyond criticism and improvement, in that sense.