I feel your pain and frustration but realistically, what way could Apple have done this better? The reason a lot of users had a problem was due to tougher password restrictions Apple put in place with the goal of protecting its users. It's not as if Apple could e-mail every single user to alert them of new password requirements in an effort to avoid issues like this one. Apple did provide notifications but unfortunately, most users would never see that unless they ran into a problem and had to go looking for answers. I am grateful for this forum and try to view it as an interactive online manual for many things. I suspect few among us reads all the Apple documentation. I know I don't until I run up against a wall and have to search for a solution.
I had the same problem and noticed that when I filled in details to create iCloud mail within iPhoto it didn't completely fill in details correctly. In username it just had my name and not my full address which is needed i.e. email@example.com and outgoing mail server needs to be smtp.mail.me.com. Did this then all works.