The "Trial of a Time Lord" arc was the best thing they could have done with Colin Baker. Much as I like him, in his first season, he just wasn't good in the role. He was too used to stage productions, so every conversation was like a monologue to an audience and every gesture was meant to be seen by the people in the back rows. It was weird, and it didn't translate well to television. The scripts for his first season were rubbish too, which didn't help.

But the writers, for "Trial of a Time Lord", decided to embrace Colin Baker's odd acting. Colin Baker can't help but monologue? Give him an in-universe audience to monologue at. He wants to gesture wildly? Have him do it at an enemy fifty feet away. His character has over-the-top bluster? Make the bluster a conscious decision, and show him thinking about subtlety and politeness before deciding to project bravery and pomposity.

Doctor Who had a lot of problems during that era, and the arc wasn't enough to save the show, long term. But it was more than enough to save the character.