"I believe Carlsen's recent bad result in Norway is the worst by any reigning WC in history, am I wrong ?"
Which is the worst result by a reigning World Champion will depend on how you count. Carlsen scored -2, with a 2693 performance. When Kramnik finished last in Sofia 2005 he had a 2675 performance and scored -2, while he had a 2658 performance in the Russian Championship the same year, even if the field was much weaker and he had an even score. Anand's -2 as last in Bilbao 2008 was a 2693 performance just like Carlsen's here.
"I am not sure of the rationale governing the crazy time control, perhaps it was done to make the game appear more exciting or to avoid draws by getting a decisive result?"
I think so, there is some sort of hysteria spreading about how bad it is with draws and that they somehow must he stopped. Having the players blitz out the endgames might increase the blunders and make it more "exciting".