It's a bend but don't break approach. Sure, things are bad this year because it's a young defense devoid of playmakers, but I expect that this should improve significantly next year.
I really don't think that Bronco plays players with inferior talent just because "they try harder." It's a combination of scheme and knowledge. If a talented player doesn't know the scheme--or doesn't put in full effort, then I'd venture a guess that the situation would be worse than playing a 'try hard' player.
I'm not saying that Bronco gets a free pass this year. The execution has been terrible and this points to bad coaching.