Well, he is arguably the main problem with the show - as Mothers Rosario proved. Once you take Kirito out of the equation the setting provides for a lot of great storytelling.
But I don't think he is a bad character. He should just be used right. Let me see..
Let him depend more on his friends. Let Klein and Agil save his ass once in a while. And don't turn Asuna into a woman in distress. Let her kill her own bullies and help out as an equal.
Also let Kirito be scared like he is in the novel. He is a 14 years old kid and people are dying all over the place. In the novel it is clear that he is putting up a front in order to boost his own self confidence and not lose his shit completely, but we don't get that in the anime.
Finally Aincrad should have lasted the entire season, so we could see more of Kirito's struggle to level up. It would look better than him "just suddenly being top level." It would also leave some room for showing more levels being cleared. In the anime there were too much time-skipping...
I don't quite know how to save this arc....
But I can't agree with @Pantsman that it should go completely. It is bad though - really bad.
The sister-thing is ok... it's anime. You're allowed to have an imouto with big boobs and a crush on you . The main problem is Asuna's situation, but since she is also the Macguffin for the entire story, there is no way to completely remove Rapey-dude.
You could improve the story greatly though by having Asuna be the one to kick Rapey-dude's ass instead of Kirito. Kinda like restoring her credibility as a hero after the damsel in distress thing. Just let Kirito come and bust the lock... she could do the rest. She is supposed to be Lightning Asuna - second in command of a major guild. Surely she can skewer her own rapists.
Oh, and the entire premise of a marriage to an unconscious girl being valid in any way or form is preposterous, even for Japan. That totally needs to go. They should come up with a different motivation. Maybe having her declared dead in order to take over the company or something.
Great premise (not using a fantasy setting for a lost-in-MMORPG anime is actually quite creative) and featuring the best female character of the series. However Kirito is once again the lone and totally overpowered hero. All the tension of this arc came from not knowing whether or not Sinon would die. She is a character you can't help rooting for, and her ass () was close to getting creamed a few times. But Kirito was never in danger. He is completely plot armoured throughout the entire story.
But here is what they could fix....
Let Asuna or Klein (who are watching everything on a screen from the outside) show up and help Kirito and Sinon when they are in trouble. Yui could fiddle with the system and mask their presence in the game, so they could enter without the admins knowing. That would make Kirito feel more human and easier to relate to.
Kirito is openly flirting with Sinon, and his girlfriend is watching everything on camera. The girl who would stand for that kind of behavior is simply not born! If Asuna were to show up and help, there should also be a showdown with Kirito for his cheating. At the very least she should demand clarification. If she doesn't enter the game, the showdown could be in the cafe afterwards. But just ignoring it, makes the whole situation feel unreal.
In the real world Asada is spontaneously shooting a BB gun... and for some reason a can is there to shot at. How did that get there? We didn't see anybody put up a can. Yeah, I know it's not politically correct, but she should shoot at a road sign or something instead. Thats what real kids do.
In the end Kirito shows up alone to confront Maniac-san. I get that they wanted a showdown between the hero and the villain, but at the very least the police should be right on his heels and maybe bust down the door just as the fight was over. Kirito coming alone makes no sense. He is working for the police and chasing a murderer, for Haruhi's sake! He would have told the busty nurse at least.
The heart monitor patch saving Kirito's life is the dumbest asspull I have seen in recent time. Having the police bust down the door and taser the dude in the nick of time would have worked so much better. Or Asada could have done something.
This arc should not exist. It's too short and feels like an intermission.
Apart from the scene where Kirito comes to the rescue and enables Asuna and The Sleeping Knights to enter the dungeon by taking on an entire guild by himself, this arc is actually perfect. And this could be fixed easily by having the rest of the gang play a bigger part in the fight. Klein, Agil, Sinon, Lisbeth, Silica, Imouto... hell, how about the catgirl from Fairy Dance?
But otherwise there is nothing to fix. This arc restored my faith in Kawahara as a writer - he actually can write proper drama when he tries.