Unfortunately, indifference and incapable are often confused, especially when the result of either is about the same. Nickolas was in large part unaware of the horrible living situation his people were in and had been in for decades. Ignorance can be seen as indifference. To the extent he was aware and willing to do something to get Russia into even the 19th century, he seemed incapable of using his power effectively. The power and wealth of the ruling class had a stangle hold on nearly everything.
It does appear he was a well meaning, nice man who was totally wrong for the job, both from a personality standpoint and from an apparent lack of ability to grasp the "big picture" of what he was dealing with. He was the Jimmy Carter of his era (not to offend any one who likes Jimmy Carter! Apologies in advance!).
Going back to earlier points, the data suggest that the 'gasoline thrown on the fire' was not the Russian, Serbian, Austrian, German issue in the east and Balkans, but rather the French activity and the English declaration of war prematurely. Had the British held their trigger fingers a few weeks or so after Germany crossed the Belgium frontier, much could have been worked out, especially given the dispositions of William and Nickolas.