If you serve an invalid notice, the notice is invalid, and the process has to begin again. Of that there is no question, and the Act is quite clear. However: some of the time, some people are ignorant of the Act so do nothing, carry on with notifiable works regardless, and nobody is any the wiser; and some of the time, people know a little of the Act, have good intentions and do something which is almost, but not quite, right, carry on with the notifiable works, but no-one picks up on it, so it all goes unnoticed; and then some of the time people know exactly what they are supposed to do and follow to the letter the procedures set down in the Act.
A lot of notifiable party wall works slips under the radar and no-one bats an eyelid because nothing has gone wrong; but then again, some notifiable works don't slip under the radar, and the eyelids are batted 24/7 for as long as it takes to put right, and then some.
The process for making good or for providing compensation in lieu is not always based upon the survey beforehand. It can be, but it is not always the case. The Act places no obligation on any person to carry out a Schedule of Condition survey prior; although, granted, it is good practice to do so. What if no such survey was carried out beforehand because it was not physically possible (rather than being obstructed), or because the works had been consented to and the two owners felt there was no need, and then the works carried out in pursuance of the Act caused the damage accidentally? If the owners can't agree to a remedy themselves, the surveyor (or two surveyors) will determine the remedial works or compensation in lieu that is required, will identify the quantum thereof and will Award on that basis (section 10 of the Act applies here). There is no arguing in court unless an Award is appealed (which it can be, upon a point of law). The surveyor's Award is binding upon the parties. It has nothing to do with not wanting to clutter up the courts and it never has been. Appeals are dealt with on their individual merits and costs are awarded by the court as the court sees fit, so spurious claimants beware.
You say it's not an enabling Act, but it is; and it has been developed since the Great Fire of London in 1666. Let's say, by way of example, that you want to build an extension, but your neighbour says to you, "I don't want that monstrosity - I hate it and I will do everything I can to stop you from building it," and goes all out to prevent it. The Act gives you rights to stop your neighbour from thwarting your attempts to build what you want to build, even though you have the necessary permssions (e.g. planning consent/building control approval/freeholder's consent etc.) to do so. Would you rather have no powers to do what you want to do without going to the expense of barristers, counsel and litigation; or would you rather there was an Act which gave you rights to do what you want and to deal with a legitimate dispute in a timely manner without the need for such expensive and drawn out action? Personally, I would prefer the latter which enables me to carry out the works at the least expense. And no, it doesn't have to cost a lot of money. The Act imposes no obligation on anyone to appoint a surveyor unless a dispute arises. The two owners can be neighbourly and the adjoining owner can consent to the works without any need to appoint anyone. The Act is there to resolve any dispute, should one arise, for whatever reason.