The eligibility criteria are here (though they have definitely allowed in older drivers in the past):
http://www.thecheckeredflag.co.uk/2012/09/2012-mclaren-autosport-brdc-award-launched/
Essentially it covers all championships up to but not including senior Formula 3 (i.e. British/Japanese/European series), so typically the Formula Ford and Formula Renault title contenders are thrown in together with a few outstanding wild cards.
This means that drivers have a lot of learning to do in the years between being eligible for the award and being a realistic F1 prospect, so it shouldn't surprise us that a fair few fall by the wayside. What's the average entry rate for British drivers into F1 these days anyway; 1 every 3 years or something like that I'd guess?
The thing that strikes me from looking at the list of past winners is that, although they didn't all go on to do great things, they generally were the best choice, in hindsight, from the list of contenders for the year in question. Of course, you could argue that winning the award got them opportunities that the losing finalists didn't have, but I think over the long term this usually plays itself out.
You could certainly argue for Dan Wheldon in 1997, or Danny Watts in 2001, maybe Nick Tandy for 2007, but I don't see a huge number of glaring "errors".