Hotspots are flawed in Storyline? Alternatives?

Hotspots work well for many situations. However, you can't add states to a hotspot. So, if you want to track whether or not a hotspot has been clicked, you need to add programming to do that. For example, you could add a trigger that changes a T/F variable to True when the hotspot is clicked. Then you could use conditions in other triggers to check the value of that variable.

You can add states to a transparent object, and buttons automatically have some built-in states. If you click any object with a Visited state, it automatically changes to Visited (i.e., you don't have to add a trigger to do that). And you can have other triggers run based on the state of objects. A common example would be to change the Next button to Normal when the State of designated objects are all in the Visited state. The main drawback with transparent objects is that you don't see them when you're editing the slide, which can be confusing.

Bottom line: Both options can accomplish the same thing. The user won't know which method you used. So it's mostly a matter of preference.