TLDR
Hot is hot! Not perfect and I have suggestions, but better than Latest on any site creating more recent topics than an average user can check at a glance. I have enabled it by default in our new community (launched from scratch just two weeks ago). I have set Hot as my default here on Meta and I think the Discourse community would benefit from having it as default here too.
In more detail
When to use Hot or Latest
Let’s not think about ourselves, the twenty-something people who have participated here and the likes that would even find this discussion. We are not representative. Let’s think about the critical mass of users that we need to call our community a success.
I think the Latest/Hot math is simple: if the activity of your forum is small enough so that your average daily visitor can glance at the Latest topics, then keep Latest as default. Otherwise, set Hot by default.
If your average user won’t have the time or the willingness to scan all the Latest topics, then whatever they see in the Main page when they land will be just a random sample. For that matter, show them a Hot random sample. The mathematical chance that it will catch their attention is way higher.
But what about new / recent topics
For users who care about new or recent topics in general, the Latest and New buttons are right there. If they care so much, they can set it in their preferences. If they care but only about certain categories or tags, they can follow them and they will see the notifications and the new/recent entries as Suggested topics.
For instance, admins and moderators probably want to stick to Latest to be sure they are not dropping any balls or noticing trouble when it’s too late.
But my topic, which is so important, is buried down there
That topic is surely important, but does everyone have to see it, or mostly the people who can do something about it, i.e. watching the Contribute > Bug queue or the tags related to your topic. Besides, we have established that people don’t have time to follow Latest anyway, so that topic will be missed by most anyway.
But the algorithm needs improvement
Fully agree! And that is an extra reason to place it as default. Otherwise only the Discourse nerds and the random user will even notice Hot and provide feedback about it.
Speaking of me
I have set Hot by default here on Meta because anyway I wasn’t paying attention to the Latest main page at all. Mind you, I’m a Discourse nerd. I just don’t spend my day following recent topics. Chances are high that I will discover more interesting topics beyond the ones I search for or create.
On our website, just two weeks old, we have turned Hot by default to everyone, and I am setting Latest for me via my preferences. I’m an admin there I will check every single post landing, the sooner the better.
I think 80% or more of Discourse Meta users (thousands) would be happier with Hot if they would just know. The other 20% or less are perfectly skilled to decide for themselves and act accordingly in their preferences. Same in my website, and probably in most Discourse websites open in the public and aiming to have thousands of users posting interesting stuff all the time, reacting, etc.
A lot of the criticism here is more related to a communication problem rather than to anything related to the Hot feature. People didn’t know. The Discourse team might have reasons not to send a message to all TL1 users explaining what will happen, why, and how to keep your status quo in your preferences, but regardless, you can do this on your site, deal with the 5% of users who will complain for a couple of weeks, and then move on. Most of the great software features that are integrated in our lives went through something similar when they were deployed for good.
Suggestions
I have read AI’s explanation about the algorithm and of course the human comments from the Discourse team. I don’t know if there have been more recent improvements but anyway, here’s some suggestions.
Compute the trust level of users driving new activity. A reply from a moderator, TL3, TL2… in a new topic should weigh more than a reply from TL0 / TL1. The different weight is already applied in the value of their likes, right?
Indeed. Views from logged in users should count, but also views from anonymous users (not the bots). Forums don’t live in isolation and people link to topics from social media, other forums, etc. I might be a TL0/TL1 here today, but turns out I’m a Arduino or whatever guru, I just posted a feature request and I’m sharing it in the Dicourse-based Arduino forum and with my 1000s of followers on social media. That generates a spike of views, your Discourse knows that because is tracking that data but maybe not even your admins are aware about the influx of visitors right now. That topic is hot today, why not push it to the Hot list.
Keep improving the Follow/Watch UX so plain users are aware of this feature and use it regularly to select what they care about and ignore what they don’t. If you are a daily visitor of a Discourse forum, your Notifications / Suggested topics should more relevant to you than the state of the Main page right now.
Really, relying on Latest alone is so 1998 
and Hot alone won’t save your specific and personal needs either. At least not the “same Hot for everyone” feature we have today. But we need to get this one good to build the “Hot for you only” alternative better.
Sorry, this was very long. Next time I’ll chat over preferred drinks. I am excited about the Hot and, well, put off, by the short and more negative than positive discussion here, for a feature of such a big impact and importance. 