So what is expected then? Instead of IPL (which is supposed to be club cricket no matter how much money is put into it and how much quality you improve) you should rather have world cup then to actually see 11 best players playing every team & every match (even that is not assured if there are some associate teams and some top teams which are reduced to below-associate level

) I think if you want that kind of intense quality then you should have strictly 3 to 4 teams formed between top-top players from India, Australia, South Africa, West-Indies, England & NZ.
As if such things don't happen in international games at all? I have seen Brett Lee go for 100 runs against India in Australia when Australia had a top team of all times!
One thing you are not observing is that the quality of IPL (in terms of players) is definitely improving every year. You need to give some time. In the early years Sunil Joshi, Jaffer, kind of players were playing it. Later on even players like Ganguly, Dravid, Gambhir got rid of it! Already players like Maxwell, QdK, etc, are feeling the heat of the competition with local players outplaying them!
Indian families are now seriously supporting cricket aspiration of their children for the kind of security/benefit it is giving. If not player, there are other associate jobs in offer (coaching, management, physio, etc) You are conveniently not seeing that Indians have definitely improved in pace-bowling department. At least now we have 3 to 4 definitely quality bowlers which was a difficult back then. Of course now Indians are also eating lot of protein food (meat, wheat, soya, etc) Actually India was a millet country before, they were not interested in games, competitions, etc. They just needed that endurance of walking for 20kms a day under sun...(Only small section of Kings & their armies were indulged in wars).
Coming back to the match you are talking, if Watson got out for that Bhuvi spell before, then the match would have been definitely interesting... These things also happen in International Cricket