Harris took the best available information to him (Butt report, Singelton report, dehousing paper ect) and made a command decision that area bombing was more effective than point target bombing and would continue to be the way that Bomber Command prosecuted the war. He felt Casablanca directive gave him open reign to target any German urban or industrial area, and none of the political or military leadership of the time really disabused him of that notion (although there were some minor scuffles leading up to Neptune/Overlord and about the Transportation Plan).
Harris, to his credit, did recognise the need for better accuracy and although he was obstinate about diverting any resources from the "main effort", did allow the formation of the Pathfinder Force/No 8 Group, No 100 Group, 617 Squadron ect through the war. RAF accuracy did improve through the war, but it could have been improved more quickly and easily if the head of BC was more open to alternatives and different targeting strategies.
It is true that at some early point in the war it was either carpet bombing of cities, or let the bombers sit idle. The choice was indeed an obvious one.
However, as the war developed, bombing accuracy and lethality of individual bombs increased - later in the war, lancs were bombing bridges, large bunkers and the Bismark with the Barns Wallis earthquake bombs. They were capable of destroying point targets with a small number of bombers during the day. There were also the mosquitoes that were able to place bombs inside the doors of buildings and into the mouth of tunnels. To destroy a factory they did not need 100+ heavy bombers to cover 2 square kilometers with bombs - they needed 8-12 mosquitoes that can actually hit the target both in day and at night.
Aside from special missions, Harris was too deep into the bomb-to-submission concept that he could not, or was not willing to reform bomber command and send it to bomb point targets as a global strategy. The 8th AF was also locked into the heavy bombers area bombing. They too could not see that a force of fast light bombers could achieve the same goals with a much higher efficiency. Once they set this huge machine of mass heavy bomber production, crew training, escort tactics, logistics etc. it was very very difficult to suddenly stop, say "this is stupid" and change everything from the ground up. They just kept on going with the momentuum. I cannot blame them.
