I’ve never held a N64 controller, is it really that bad?
No, you would hold the middle and right handles for games that used the analog stick or the left and right handles for games that used the D-pad.
I cant think of a single game that required both the D-pad and analog stick so the 3 handle design worked fine.
Turok 1 and 2 used the L button to bring up the map and the d-pad to scroll it (while holding L). The d-pad on its own allowed to switch between different ammo types. The general rule was that d-pad and L button would only be used if they were the only buttons left and they only got tertiary functionality assigned to them, so basically things that would be used only rarely.
The most overloaded control scheme was probably found in Forsaken which used the six face buttons for movement (forward, backward, strafing left, right, up and down), the stick to look around, Z for the primary weapon and R for the secondary weapon. That necessitated the use of the d-pad for weapon changes of the primary and secondary weapons.
More obscure knowledge is the existence of a Japan-exclusive sumo game that used the d-pad and analog stick, and was played with the left hand on the left handle and the right hand on the middle one. Unsurprisingly the least popular grip option by far, because it omits the side of the controller where the face buttons are located.