After a bright start, the quality of rugby on show during the Six Nations disappointed Gatland - until the championship reached its sensational climax in Cardiff.
Wales retained their Six Nations crown with a record victory over England in what was a perfect scenario for a Lions coach.
Gatland said: "We felt there was a little bit of a fall-off in the quality of some of the games but not in terms of the character and guts that were shown.
"And on the last weekend, we couldn't have asked for any more for the finale with one team playing for the Grand Slam and the other team still in with a chance of winning the championshop.
"That set it up for us with a good level of intensity and physicality. There was some fantastic rugby played over the first weekend."
But the Six Nations is not the be-all and end-all when it comes to selection.
Gatland and the Lions coaches held another meeting this week and experienced players like Paul O'Connell, Dan Lydiate and Tommy Bowe, who all missed the championship through injury, remain in contention.
Lydiate will make his return from a broken ankle tomorrow night, when he plays for the Newport Gwent Dragons, while O'Connell will also make a timely return for Munster this weekend.
England loosehead prop Alex Corbisiero is also still in contention, another who, it appears, will only have to prove his fitness rather than his form to get on the plane.
For others, the European semi-finals weekend will be the final opportunity to nail down a place on the tour. Four years ago, one player was selected just an hour before the squad was announced.
The Lions management expect to still be having final discussions on the night before the April 30 announcement, when they will no doubt be dissecting performances from the Heineken Cup and Amlin Challenge Cup semi-finals.
Gatland had been asked to name his touring squad a week earlier but put his foot down because of the important lessons he can learn from watching players perform with a final place at stake.
"We came under a bit of pressure to name the squad a week earlier from the suppliers who have to get a lot of the gear out, get the players suits done and stuff," Gatland said.
"But that is a week that could potentially be significant where there is a lot up for grabs and it gives players who may have been injured more opportunity to come back."
Meanwhile, Sir Clive Woodward believes Sam Warburton is the leading contender to captain the Lions in Australia.
He said: "He would be favourite for me. The Lions captain has to be an automatic choice - you can't have a captain who any players question should be in the team. I think Warburton is back to his best."
As for the squad itself, the man who led England to World Cup success in 2003 added on Sky Sports News: "I think it's about picking players who are playing well at the moment. It's a difficult job and I think he (Gatland) is in a great position. We all wish him well.
"I think the Lions have a great chance. I think Warren has the players and will be very confident after Saturday's round of games. But it will be a hugely challenging tour, with the fast pitches and bad weather."