The Tektro caliper brakes I've got were flat-out ****ty with the original pads. They were fine when brand new, but after one hard stop from 30 mph, they were junk, making more scraping noise and turning to mush like you describe, even when cool. Switched to better pads, and they've been fine ever since.

I've had three different disc setups so far -- hydraulic MTB on knobbies, BB5 with MTB levers and 700x28 slicks, and BB7 with Shimano road levers and 700x28's. Besides tires, the big difference between them was whether the caliper was out of adjustment. Once that got fixed, though, I could get the mechanical brakes to grab almost as positively as the hydros, with the difference mainly in how they felt. The mechanicals felt like they had a bit of drag in the cable, while the hydros had a clean, precise feel.

I still would rather have discs on an everyday, all-weather bike. And a dynohub. And drop bars, deep fenders, proper rack mounts...