Thanks for sharing your experience about using beta readers. I think this is so important for any type of media creation, from books to music to videogames. I am actually developing a framework that explores this called Lean Media:
What is Lean Media? It’s an approach to creating media content that emphasizes low-cost production, careful observation/measurement of audience feedback, and fast iteration. Properly incubated and carefully scaled, Lean Media projects can attract loyal audiences and grow into successful works and brands.
(more information via http://leanmedia.org)
Would you be interested in being profiled on the blog about your approach to using beta readers? If so please email me at ian -at- leanmedia.org ... I think what you are doing would provide a great example!
The consistent feedback I received from those readers weighed heavily on the major edit which followed. I had made some mistakes, no doubt about it. The work is now better for it.
I then gave the "finished" book to a much smaller group of beta readers and repeated the process. Then I went through the book a few times myself to improve the flow. Finally, it went to the copyeditor.