I usually play this game to develop teams and specifically to create squads of academy players as much as I can.
Presently playing FM21 and in Ligue 1 with Nice. I've spent the majority of available funds over the last 4 seasons on improving my youth set up so money poured into Youth recruitment, Youth Facilities and Youth coaching as I try to become the Rivieras top club for youth development battling the likes of Marseille and Monaco.
I mostly agree with the majority and 2-star PA or below youngsters won't develop into much for ligue 1 standards, but I do keep them around until the youth contracts expire and let them go on frees just in case they have a developmental spur. Those initial PA ratings from the coaches are usually just guides for me. I've had players of 4.5-star potential come through and they just didn't improve in development and over time their rating would drop to 2.5/3 stars at best. I've had 3-star PA players change to 4/5-star players after a season or two when they are getting some first team matches.
Personality of the youth player is vital; I've had some really good-looking players but are unambitious and no matter how I tried mentoring they just didn't shake their laziness or show any ambition to be a better player. Now I don't bother with unambitious personalities and stick to developing players with the right mindset from the off.
I have a wonderkid CD and wonderkid DM in my present squad. Both developed differently too. One is from my youth set up, he was a 3 star player at first but has now developed to a 5 star wonderkid, the other was a purchase after PSG decided he wasnt going to make the grade and didnt offer him a new contract. I also was wondering why I bought him at one point but I threw him into a match as a sub and hes just improved match after match to now become a wonderkid DM after initial scout reports said he was a 3 star at best player for CA and PA. (My scouts are good too mostly have 18 JCA and JPA)
Early youth development seems to have a nice random element so you never really know how they will progress but just have an idea and hope they will be the next big thing. Overall, I think its playing time that radically improves their development and its then the coach reports start becoming more accurate for giving you a better idea how they develop and handle competitive matches. (kind of like me irl.. a street legend in my neighbourhood but never good enough to play competitive probably because I'm unambitious and lazy hahaha)