If the Olympic Village did not exist, where would athletes stay? The poorer countries wouldn't send anyone to compete. Yes, the commercialism gets a bit much, especially the McDonalds exclusive, but you can bet that McDonalds paid a ton of money to get that exclusivity. Without the sponsors (and the protection of those sponsors), the UK would be paying a lot more money to host the games.
So what if the city gets taken over for two weeks? I find that the actual competitions are still very fun to watch and there is no other event in the world that combines so many varied sports and so many countries in friendly competition. I only wish that NBC would stop worshipping Michael Phelps. There is no reason that they need to broadcast every single swimming heat, while we miss other events like archery, judo, and shooting where Americans are winning medals.
As far as what happens to the buildings afterwards, that's up to the city. China's bird's nest stadium sits mostly unused these days, and the swimming building has been converted to an indoor water park.
I do agree that it gets a bit silly when professional athletes are competing. Does anyone even watch the basketball tournament? It's a given that the US will get gold. Same with Canada and ice hockey in the winter olympics (although the US gave them a good fight last time). I imagine it's the same with soccer/football. But the other sports are mostly amateurs, as their sports don't have professional leagues. Track and field, canoeing, rowing, water polo, badminton?