Any episode that threatens to introduce a long-lost third Brother Winchester is treading on thin ice from the get-go. I distinctly recall the hue and cry when the first inklings of this episode were strewn across the internet by distressed fangirls. They shouldn't have been worried. How many times have the earliest spoilers turned out to be woefully devoid of context?
I knew that all would be well once Sam and Deam met with Adam at Cousin Oliver's, passing by the Fonzarelli Water Skiing poster on the way to the table. The episode was filled with references to past "jump the shark" moments, and the writers used the expectations of the audience to pull off some wonderful twists.
The interesting thing is that the existence of Adam shouldn't come as a surprise, if one thinks about it logically. The life of a hunter lends itself to sowing wild oats, so to speak, and if Dean is a reflection of John, then where else would Dean learn the ropes? We've already seen one episode where Dean thought he had fathered a son on the road, so the odds were favorable for more Winchesters out there.
As always, the action is a catalyst for character exploration, and we get to see just how much the brothers have changed over the years. In particular, this is episode says a lot about Sam and how hardened he's become. Sam looks at Adam and sees himself, the younger brother who thought he could escape the legacy of the Winchesters, and he feels like he was fooling himself to ever believe he could live a different life.
Sam is being very selective in his interpretations of things, especially given what we know. It was Azazel that made it impossible for Sam to leave his old life behind, and that had more to do with Mary than John. Sam may not know that, but Dean certainly does. But more to the point of the episode, this isn't about the facts, it's about how Sam is choosing to view his life and his path. Sam doesn't see a way out, which is a dangerous place to be, psychologically.
Meanwhile, knowing that John had another son makes it even worse, because John apparently gave Adam the kind of life that Dean wishes he could have had. Dean admits that he spent his entire childhood trying to emulate his father so John would give him approval. That meant giving up any notion of a normal life, as we've seen. Adam never had that problem, and it forces Dean to realize that John was perhaps the wrong role model.
Looking at it from John's perspective, he already had tried to raise Dean in his image, and it didn't work out at all. John wasn't disappointed in Dean, but he was sorry that Dean never had the chance to make other choices. That complicated his relationship with Sam, because Sam wanted out, but John didn't know how to handle that. Along comes Adam, and John has another chance and learn from his mistakes. I doubt that John ever thought that Sam and Dean would run into Adam.
Because Adam served a purpose in terms of exploring how the Brothers Winchester have changed, and how it still all ties back to who they were and where they came from, his purpose was short-term. So it makes sense that he would be dead at some point in the story. Making him dead before the story even started, yet still factually the son of John Winchester, was the perfect way for the writers to have their cake and eat it, too. It allowed this story to stand on its own, while still pertaining to where the Winchesters are, and more importantly, where they are going.