First of all, I wanted to say that I may be one of the more hardcore YIJC fans on this board. I think the "Young Indiana Jones Chronicles" is definitely one of the greatest TV dramas of all time, and I actually think some of the episodes are better than the IJ films. Also, I think that Volumes 1-2 of the YIJ DVD sets that recently came out are among the top ten TV DVD releases this year.
And, I am looking forward to Volume 3 of the DVD set even more than the new IJ film.
That being said, however, I completely understand why the "general public" (primarily in the US) either didn't like the show, or just didn't "get" it:
* Anyone expecting the show to be a smaller, TV version of the films was dissapointed. The show was not meant to be like the action packed adventures that we saw in the films, but a slower paced journey through the history and events of the early 20th century. Lucas even stated this in interviews given at the time the show came out.
* I think the educational aspects of the film turned some/many people off. I even remember a friend at the time mentioning that he would have liked the show better if Lucas didn't try to make it "educational". Of course, that was one of the whole points of the show, which was lost on many.
* The fact that Indy met a lot of historical figures seemed far-fetched to many, and this has also been mentioned on this thread. I had no problem with this, and found it made the show more interesting. After all, it is a TV show and IJ is a larger-than-life heroic character anyway, as seen from the films. So, I took these meetings with historical figures with a grain of salt, and saw Indy as a guide through the 20th century - we were seeing the events/historical figures through his eyes and from his perspective.
* The non-chronological airing of the episodes (when they were originally shown) was probably confusing to many. First you saw Indy as late-teenager, then as a little kid - then you saw him fighting in WW I, then in New Jersey going to High School, then as a spy in WW I, etc. Because of the nature of the shooting schedule, I don't think that they could've shown the episodes chronologically - however, most mainstream audiences don't like seeing TV shows that way.
* The WW I aspect of the show probably didn't go over too well with a US audience, since WW I was not a huge deal in the US (the US only got offically involved in the last year of that war). However, I think the show did very well over in Europe, which was greatly affected by WW I.
All this being said, the same reasons that the show didn't do well are the exact reasons that I liked it. It was a completely original, big-budget historical TV show that showed the audience some of the defining and important events at the beginning of the 20th century.
Hopefully the show will find a new audience on DVD. Watching the tele-films on DVD is probably the best way to watch the show, since they are being released in chronological order and make the most sense when viewed in that order.