Regarding the added value:
To my understanding, several routes are flown by both KLM and Easyjet in which the blue bird is following the orange bird (as in load factors). Therefore, I think that by, for example, buying seat blocks KLM can operate more efficient by using the resulting capacity on more profitable routes.
Regarding the service differences:
The service issue is a valid point you bring up.. Aren't most of these flights related to feeding passengers into the hub? In which people go for the service of the intercontinental flight?
Regarding Transavia:
I think that for KLM it is indeed better to "use" their daughter Transavia to compete with Easyjet. Before that a lot of work needs to be done regarding their business model?!
Tim