Not entirely true, even Brooks on "The Mythical Man Month" suggests to Plan to throw one away.
So the suggestion isn't "the path to madness". The way to avoid the Second System Effect is simply to make a commitment not to develop new features on the rewrite. This second system will do the same as the first one except the code will be better.
An example of a successful project that did this is Subversion they pretty clearly said that they wanted to Create a CVS equivalent with certain annoyances corrected. That clear purpose and definition helped them avoid feature creep.
So the suggestion isn't "the path to madness". The way to avoid the Second System Effect is simply to make a commitment not to develop new features on the rewrite. This second system will do the same as the first one except the code will be better.
An example of a successful project that did this is Subversion they pretty clearly said that they wanted to Create a CVS equivalent with certain annoyances corrected. That clear purpose and definition helped them avoid feature creep.