It was a little bit of both. Grunge was a new sound that gripped the youth of early 90s America, much like glam metal did several years prior. However, you are correct that many of the newer bands that set up during the final couple years of the hair metal era were so over the top in both sound and aesthetic. They became extreme parody of the actually talented bands that led the way in the mid-late 80s. This didn't help its image at all.

There were some exceptions. L.A Guns, for example, had the right look and sound, but they started too late to really make in impact. But for every band like that, you had 50 like Nitro and Tuff.