The answer to this question is multifaceted. If you can fund the Masters, either through personal savings or loans that you are willing to shoulder, then elect that route and write an excellent thesis, using this experience to determine the landscape in your specialty and develop a network as well as even better letters of recommendation. In that case, make your decision on program based on minimizing costs and maximizing fit with a particular faculty member. Contact candidates directly and explain your objectives. If they are not on board, or can't lend prestige or contacts to your cause, then move on to the next candidate. If further graduate education requires that you receive support, you had better have very strong GRE scores and write an extremely focused personal interest statement keyed to a particular faculty member's specific interests, even his or her emergent interests. Address the impact of your first year, but show how that experience drove later research interests (so it is not just a sob story.) As far as competitiveness for these programs, I can't say. I am curious what others might offer to your question and this unanswered dimension.