Oh, sure, Ledger was chewing the scenery, every single second. It's the way he did it, and (imo) made it believable (the character is a freak who enjoys quirky theatralics just for the sake of it, even when no one's watching), that people love.

Having that said, I did find all the "best villain evah" exclamations pretty fucking ridiculous, because there are also villains in more serious films that don't chew scenery by virtue of being based on flashy, hammy comicbook characters, and being one who constantly wears a mask and hides behind his quirky mannerisms, is one inherent disadvantage that simply can't be overlooked.