It's not always a case of playing your bench too much, or too little. One of the biggest problems with Melbourne (as has been noted) is that they seem to be making subs way too rapidly. When players are only coming on for 2-3 minutes, it's almost impossible for them to get into the flow of the game. This is similar to problems that Aaron Fearne had for years as the Taipans coach, on that he had a fixed substitution pattern in his game plan, both in terms of who would come in for whom, and also in terms of the time frames for these substitutions. It's only since he's learned to relax this concept that the Taipans have started to have some success.
Bench players play a variety of very important roles on a team, and that's the key to the whole thing. It's all very well to have NBA players (or other paper heroes) coming off the bench, but if their playing styles don't match what's required by the team on the floor, it's not going to work. That's what's going on in Melbourne at the moment: witness Wesley hanging around the 3pt line, waiting for a shot - he's been employed as a low post threat, and it's just not working out for MU. It's also why Sydney need Blake and Powell coming off the bench, because their skill sets are better suited to that role than Cadee or Maric's are. Coaches have to build their teams around supporting their best players, and in this case, that's Lisch and Newley.
As for Blake starting in front of Cadee, you have to be kidding. Kidee is having a great year, and is FAR more dangerous than Blake at the moment. Blake is repeatedly being baked by quick opposition guards. He doesn't have the foot speed required to guard the likes of Weeks or Heuir (as shown over the weekend), much less someone like Randle, who would probably break Blake's ankles with an eye-fake. He also doesn't really look like much of a threat taking his own shots.