I agree with you, I'm not keen on this film and the plot is rather constructed and artificial, although the author of the book was highly thought of at the time. But I disagree about the "gratuitous sleaze", unless I'm completely mistaken about the meaning of the word "gratuitous". Let me explain a bit about Berlin. It really was (and still is to a certain extent) full of sleaze and what you see in the film is only the west, the state of housing in the east was rather worse.
In the sixties and seventies, you could get extra grants for studying in Berlin and also exemption from the draft (otherwise all young men have to serve in the army in Germany). THis was meant to keep the city alive, to prevent all the young people from going away. But one of the results was, that a lot of politically left people moved there, including quite radical ones, but also the peace movement, plus students, who didn't get on with studying, and in general a lot of weird but also arty people. They all went for cheap housing, like in the film or even went squatting. The resulting scene was a political hotbed, especially in the sixties and seventies. While more conservative people thought them all more or less criminal, among young people and intellectuals it was thought to be very colourful and the fashionable thing to be there and part of that scene, at least for a while. So when this film was made, it probably represented a fight establishment (Kolcyk) against the alternative scene, although Ziegenhals has certainly no political excuse or ambitions.
So don't damn this film outright, it hasn't aged very well and it is certainly not a film for the international market and was never meant for that.
You may be mistaken about either "gratuitous" OR "sleaze," but let it pass... we're trying to keep it clean here. It may simply not be possible to mentally translate this movie into anything American, but as a film I do think it fails on the counts of good intrigue, twist ending (I'm sorry - I've actually seen this flick praised for the "surprise" at the end, but I couldn't even follow the dialog and I STILL saw that ending coming a mile away), and character study as well. Had I cared the least bit what happened to any of the characters I could have forgiven some of the other factors, but I found the whole thing very silly and the movie just has a nasty look to it.
I understand your point about its origin, that it shouldn't be compared to big-budget theater releases. But I still can't think of a single reason to recommend it to anybody... I don't think there's really anything to be gotten out of this one. For those who like the German material from the 70's I think there are other choices for Prochnow films which are far more worthwhile.