At the very least, Palpatine had read the Book of Five Rings.
The Jedi were much more appealing in the OT, where as far as we could tell, they were primarily a spiritual group of clever old guys who apparently practiced swordsmanship as a path to personal betterment--in contrast to the Sith, who only knew how to use brute force and treachery to get power, and used swordplay only to hurt others. PT Jedi, while very flashy fighters, don't seem to uphold that legacy. They're blind, and not even in that cool Zatoichi way. They're horrible detectives, on top of it--it doesn't seem like they're particularly good at anything, when the least they could do is be tragic heroes.
That line in AOTC about 'our powers are diminishing' almost seems like an attempt to explain why they're so lame, but it's a lame explanation in itself.