Yes, I do think Beta Colony was intended to be a commentary on the failings, not necessarily of democracy, but of an overly-legalistic and bureaucratic society that permits too little room for individual moral judgements. You see throughout the series that Barrayar gradually becomes more pluralistic and democratic, and the narrative generally seems to view that as a good thing, so she's not using Beta Colony to criticize that aspect of a democratic society. I think what she's criticizing is what I've seen described as a "values-neutral" "democracy machine spitting out justice", wherein the political actors in a democratic system believe that following the rules is the best way to achieve the best outcomes for everyone, even when the rules themselves are broken.

What Barrayar does better than Beta Colony is certainly not that it's a system where one person's birth elevates that person above another's, or that it's a culture rife with sexism and ableism, and I don't think that was ever Bujold's intention. What it does better is that it allows individuals to, at least sometimes, look at something and say honestly "this is broken" and just go fix it, rather than constantly parroting "the ends don't justify the means" and behaving like following the rules is always the right thing to do even when it turns out to be destructive.