An instructor should at least be competent, if forgivably unimaginative in teaching a course in a brand new area first term. Of course, some odd rough spots are to be expected as well, although complete incoherence should be avoided. But yes, third term is the time to turn the corner and really sparkle.
I remember this happened with a professor whose course I was taking the first time around. It was an area the instructor was particularly enthusiastic about, but new to. There was a lot of hypothesizing and exploring, but no real coherence that first time around. I dropped a couple weeks into the course. I returned a year later, the third time he was teaching the material, and it flowed. Coherent and imaginative. Nice!
While having a professor teach an unfamiliar topic has some potential disadvantages for students in the first couple of semesters, it has a potential payoff for the professor. After teaching a new topic for a few semesters, you become an expert in that area, and have a new area in which to expand your research. In the long run that is an advantage to the department and university too. It also will help you to have more than one area of expertise if you want to apply for a job at another university or college. I think its the third and fourth semester when your competence catches up.
