Yes, the acting is undeniably stiff in the prequels. As far as I know, Lucas would often be satisfied with how his actors performed in a shot or scene after just one or two takes, giving them little real direction (at times none, as has been revealed in some interviews with the cast) or giving them little to no chance of bringing in some of their own ideas and takes on their characters. He is just a visual director first. That’s how he works.
But the fact is, the prequels were never designed to be the kind of space adventure that the OT was. They were mainly designed to allow for the new CGI technology to present itself on the silver screen in a spectacular new way while story-wise they focused more on world-building, exploring/explaining the Force, the political structure and inner-workings of the whole SW universe. The movies greatly expanded on it through an incredible amount of amazing visuals (rather than amazing characters) giving us background and facts on the creation of the Empire instead of following a group of heroes on a journey to defeat it one day.
It seems like in the PT Lucas used the actors/characters more as just tools necessary to show us all those grand visual ideas he’d been holding at the back of his mind but could never truly realize before. That and the fact that much of the charm of the OT came from the miraculous casting job done for the first film. With his not-so-great directing skills, I believe Lucas just got lucky to have brought together that amazing main trio of actors and then have all the sensible writing and directing assistance later with TESB (especially from Kershner, a great character director) and TRotJ. I can’t imagine how any of the other candidates for those three roles would have been able to bring us that magical chemistry between the characters.
It was obviously not gonna happen again with the PT. And the whole story was going to have a very different feel to it. There’d be spectacular action, fun and excitement. The fun just wouldn’t come from the main characters nearly as much as it did in the OT.
However, what happens to them in the TPM still matters to me and I agree that the Duel of the Fates is a work of genius. The payoff is incredibly satisfying at the end of TPM no matter the flaws that precede it.
But yeah, even though TPM and the other two prequels were planned as a different kind of story from the beginning, there’s no excuse for how some of the dialogue is delivered in the film. All it took was to tell the actors to cheer up a bit and act more interested and engaged. Oh, well. Still my favorite SW film.