You are correct about the useless nature of "treat levels" which this system provided, however you missed the point of why it existed in the first place. It was brought about because the government needed to look like it was doing something, and in America that's just as important as actually doing something. Specific information would be far more useful, but it takes time and effort to collect, connect and distribute. If a threat is centralized in one place and that place gets a proper, specific warning, people everywhere else are going to say "Why didn't I get anything?" even if there's zero chance they were at risk. Additionally, there isn't always reliable or detailed intelligence with which to make good warnings. When there isn't, the government can't just say "Yeah, we have no intel today." because they'd look lazy and incompetent. Enter the Color Coded Terror Alerts, the government can please everyone by making something that sounds like a warning, but without the burden of correlating data, or the risk of revealing there is none.