inside view
Despite what many people think, commercials aren't really the way
to make a little money to save up for your features. Commercials,
especially the nationals and "well known brands" ones are huge
business - MUCH bigger than feature films - and thus MUCH more
difficult to break into.
Local commercials can be one way to go. But if you don't have good
enough equipment to make a broadcast quality commercial, I suspect
even the local places will hire someone who does.
I work in the ad industry, producing commercials for large companies. While you're right that it's no ticket into the film industry, it can provide you with all the skills you need to do so in other ways.
You can't save up to break into film at any job, the bottom tree branch is like 3 million dollars. What you can do is prep yourself to deserve investment, and then show people that.
Commercials on the very large scale are often done by television and film directors. (ford, ATT, etc)
but mid-range commercials, signage, and regional work can be a source of income while you learn advanced skills.
About the competition. I have no idea what you are talking about. Competition is not stronger out here. 9 out of 10 ad guys are lazy as hell and haven't learned a new production trick since 1995. You will have some trouble booting out the sediment though, as many are seasoned veterans with what amounts to tenure, and companies will pay someone with half your skill 100k a year rather than fire him and hire you for 50 just because you are better.
Getting into an established production company that regularly is outsourced for major corporate jobs can be tougher. The new mentality at these companies this decade is the managerial genius of crowd sourcing. Instead of giving 1 person a fair wage with benefits, they just toss jobs out into the market and take the lowest competent bid. The only people that really make money in those situations are the companies, as no one artist wins enough bids to make a living.
I got my job by just walking into an expanding business with one of those lazy guys there (hey have you heard of this new program photoshop, I make six figures, wheee!) , and saying, here, I can eclipse everything you've done graphically in the last ten years this month, hire me. They said do the month free first. I did it, and they hired me. I can usually polish off their jobs in 15 days a month, and still have time to work on film. Here's a couple of ads I got paid for that I also used to develop filmmaking skills.
https://www.youtube.com/watch?v=uKVFhUeMUDI&feature=player_embedded
https://www.youtube.com/watch?v=i2Xb1eqxO-Y