JaMarcus Russell was a guy people rated highly because of the success of his college team, LSU, and Russell's performance against a relatively subpar opponent (Notre Dame) in the Sugar Bowl. On top of that he was 6-5 and did have a strong arm. Comparisons to the next best QB (Brady Quinn) made him look even better. So for average fans (and the Raiders) it made sense to draft him first. For those that scratched the surface his mechanics weren't that great. He had a slow delivery and often threw off his back foot. His decision making was mediocre and he threw into coverage far too often; something he got away with in college but not in the NFL.
As far as the work ethic thing I do recall a couple reports of that being an issue before he was drafted but it's a bit difficult to do an internet search finding those articles now, since so very much has been written about him since. I did find at least one though, so it's not as if there was not anybody questioning Russell's work ethic prior to his being drafted:
JaMarcus Russell wants to be NFL's No. 1 priority - USATODAY.com - 2/25/2007
There were questions about his footwork, his experience and his work ethic.
I seem to recall one of the big names (Mayock?) bringing up his work habits but can't swear to it. More than one report of him being last guy to arrive/ first to leave got swept under the rug by most because of his physical abilities and highlight reels.
Russell was in the right place/right time. Raiders picking first and you know how Al Davis loves that vertical passing game; Russell is a guy who can throw the ball sixty yards from one knee. On top of that it was a relatively poor QB class - the other QB's were Brady Quinn, Kevin Kolb, Trent Edwards, John Beck, Drew Stanton, Tyler Thigpen, etc.; they just made Russell look even better. Throw in Quinn having a bad bowl game head to head against Russell having a good game and the divide grows larger. And don't forget Russell had some pretty good receivers in college (Dwayne Bowe, Early Doucet, Brandon LaFell), which helped him out too.