I wouldn't say that the rail coil in a P-Rails sounds bad, it's just that it really doesn't sound like a vintage-style Strat pickup. It's sort of in the same ballpark in terms of output and general tonality, but it's really its own thing. I've used them before and I'm about to get a set for my SG, and I really like all 4 sounds you can get with triple-shots or similar. Since you wanted to know as much as possible about them, I'll include my impressions of the 4 sounds / modes.
1. Series: A rather fat humbucker that compares nicely with a Custom or JB. The coils aren't matched, so there's definitely some single coil personality coming through. I've heard some say it sounds like a humbucker-ized version of the P-90 and I can't say I disagree.
2. Parallel: P-rails' best-kept secret IMO; I don't know why this option isn't used more often. Sounds like a bright PAF (maybe a less-soft Pearly Gates?) with strong single coil personality due to the mismatched coils. When using both P-Rails I used the neck pickup in this mode or P-90 most of the time.
3. P-90: That pretty much says it all; the closest thing I've heard to a real P-90 that fits in a humbucker slot. I have a set of Phat Cats in my SG now, and I'm switching to P-Rails for the extra versatility and because this P-90 is MUCH better than a stock Phat Cat.
4. Rail: A very modern Strat-ish sound. The best description I can think of is maybe to imagine the Vintage Rails as a true single. They excel at a hifi clean sound, but I can't say I've used them for much beyond that. I definitely plan to play this one more once I change pickups in my SG.