Success is one of those things that can only be measured with respect to a certain frame of reference. The consumer perspective(s), the investor perspective, and the employee perspective can all lead to wildly different evaluations of a project's success.

On the positive side, you've got the fact that they made it to a profitable exit, which would be hard to ignore if you had a financial stake in the venture. You've got the implication that Red Hat believed that CoreOS was essential to its fortunes in a container-oriented future as a clear vote of confidence that they built something good. The fact that Red Hat kept CoreOS going suggests that they felt it was so good that their existing technology couldn't realistically catch up.

On the negative side, if you don't like Red Hat then, yeah, that certainly counts as selling out.