The prequels failed mostly in execution of ideas and not the ideas themselves.
Lucas said going in when he started work in 1994 on the phantom menace that they would be tonally different than the original trilogy. Darker than the middle act, at the time he was still considering making 7-9. The middle act of course being IV-VI. IV-VI followed heroes and a basic heroes journey as outlined by Joseph Campbell in The Hero with a thousand faces.
Episodes 1-3 would be the opportunity to show a hero's fall from grace and turn to evil. The real problems george had was making anakin liked and cared for by the audience. The hero is usually proxy for the viewers fears and desires, the viewer or reader if it is a book goes on the journey the hero does.
Anakin's story should have had more resonance and focus because he is a mirror onto the fact that all human beings have the potential for evil within them. You can reject evil and renounce it as Luke did or Like Anakin embrace it.
Luke Skywalker was easy to identify with as an everyman.
The audience cares for Characters Like Luke Skywalker in the star wars trilogy or Frodo Baggins in Peter Jackson's Lord of the Rings trilogy. Lucas failed at connecting Anakin to his audience.
He was going in the right direction in episode 1 with a slave boy the audience felt somewhat sympathetic to, but by Episodes II and III that whole angle was forgotten. Almost like Lucas was in a rush just to get the damn thing done and off his back. We know what happened with the original trilogy when Lucas wanted to rush things, was a drop in quality between the Empire Strikes Back and Return of the Jedi.
The making of the films more kiddie and mainstream was a sellout. Thematicly the themes touched on Vader in the oot and the prequels were very interesting. Man Machine Relationships, The Desire for Power to do good and in the end being corrupted by it. Had he delivered that dark epic he promised with 1-3 i don't think people would complain.
At the same time he deserves some slack at least as far as episode 1 goes. That was a damn good script and movie for a guy who returned to Star Wars after 16 years, plus 22 years since he directed a film. Star Wars in 1977 being his last. In any Craft whether it be music, filmaking, or novel writing you cannot take twenty years off and not expect to get rusty. He needed more help writing and directing these movies. The friends he asked turned him down nobody wanted to do this project, so he was forced into writing them and directing them himself.
He could have looked outside his little intimate circle of friends at the expense of his zone of comfort and he would have had to loose some control over the movies and step back and take a producers role. He had far too much invested emotionally, and financially to leave this universe and its characters up to someone else.
Was there a possibility of bringing in some professionals who were fans of the oot to direct and write episodes II and III and make them better films, yes. But there is also the possibility they would be worse than what Lucas delivered.
Don't forget Steven Spielberg did uncredited work on episode III. Supposedly he worked with the computer dudes who did the mustafar duel scenes. Which is funny because Spielberg was originally offered Jedi but could not do it because of being a dga member. He was also offered star wars again sometime during the making of the prequels and turned it down, rumored Lucas asked him to do Episode II. I know for a fact that he asked Ron Howard to direct episode 1. That is the funny part Lucas ended up directing all 3 prequels films when he never intended to direct any of them, and if need be only 1.
He told Spielberg his ideas for the prequels and Steven visited Skywalker ranch. He told George his ideas were great on episode 1 behind the scenes footage.
Then watch Indiana Jones IV and it is clear Spielberg has not lost only his touch but also his judgement on what constitutes a good idea, or who are good actors.
Even Coppolas works have gotten worse as the years go on. Scorceses work not as good either but they gave him an academy award for the departed which was a far cry from the brilliance of taxi driver or raging bull. Spielberg has been Lucky that he made more good films and more evenly balanced between good and terrible films than Lucas. Even the Lousy films he has made have had their moments like War of The Worlds, and Kingdom of the Crystal Skull.
Speaking of Spielberg he is a lot like Lucas now producing more films than he directs. He handed off trial of the Chicaco 7 to Ben Stiller, Jurassic Park IV to Joe Johnston. And after he phoned in Indiana Jones IV decided to Take a full year off before making Lincoln, in 2010. Also Producing Transformers Revenge of the Fallen and Ghost in the Shell. He was supposed to direct one of the tintin films but no info is showing up on imdb. Spielberg and Lucas best years are behind them. Though audiences are more willing to give Spielberg a pass than Lucas, most have already forgiven Indiana Jones IV or blamed it on Lucas.
Lucas fans and critics are almost impossible to please and are more willing than ever to tear him to shreds.
Lucas not doing his little films but producing More star wars tales with Clone wars and the live action tv show. Also producing that Tuskagee Airmen movie i forgot the name of, and will Produce Indiana Jones V is he can get a script together and Spielbergs Schedule is free in 2009. But then he won't be free again until 2012.