I think it’s worth looking at some of these things in greater detail to see where the problems might be arising. (To the extent that they are, anyway.)
Writing: At one time, people didn’t have any problems with Lucas’ writing. He did the bulk of the writing on his other features:
THX-1138 was written by Lucas with Walter Murch (whose only other writing credit is 1985’s Return to Oz) and an uncredited Ben Bova (whose contributions, as I understand, were not extensive).
American Graffiti was Lucas with Gloria Katz and Willard Huyck. Katz’s and Huyck’s resume includes such stinkers as Howard the Duck, Lucky Lady, Indiana Jones and the Temple of Doom and Radioland Murders. So if you’re going to state that they rescued Lucas from bad writing, you’re going to have a hard time making that case.
Star Wars is credited to Lucas alone, although producer Gary Kurtz probably had some input. Still, the shooting script was pretty much Lucas and Lucas alone.
Empire is credited to Lawrence Kasdan and Leigh Brackett, with Lucas getting a story credit. According to Kasdan, in an interview in the L.A. Times last week, nothing from Brackett’s original draft remains in the final script, but they wanted to give her a credit. So that means the script was all Kasdan and Lucas.
Jedi, also, is credited to Kasdan with Lucas getting a story credit.
So it looks like, up through 1983, everything was pretty much Lucas or Lucas/Kasdan. So what happened to his writing abilities between 1983 and 1999? Not much, in my opinion. For TPM, it was all a solo job; for AOTC, he had the help of Jonathan Hales, who worked with Lucas on the Young Indiana Jones series and did the screenplay for The Scorpion King. Not a literary giant, but capable of writing a decent screenplay.
So I don’t think it’s fair to say that Lucas is a bad writer; his first three features, which he handled all or most of the writing for, are considered pretty damned good films if not classics. Maybe he’s lost it in that department, but I don’t think he’s completely lost it. I think a stronger argument can be made for . . .
Directing: Again, Lucas’ direction on his first three features is considered more than adequate. Not daring or groundbreaking, but far better than “competent,” and in spots a definite cut above his peers of the time.
In 1977, Lucas got into a snit with the Directors Guild of America. The DGA was unhappy that he had no credits at all at the beginning of Star Wars, and told him he had to add them or get fined. Lucas said that adding credits would screw up his whole concept of the movie, paid the fine, and quit the DGA. Although the success of SW allowed him enormous financial leverage over its sequels, Fox would not allow a non-DGA director to direct them, and Lucas was slightly less interested in directing at the time. So, he hired out the jobs.
Looking at the CV for Irvin Kershner and Richard Marquand, one could make a strong argument that their SW films were the best movies they directed. Kershner was a better-than-average journeyman with a couple of hits (The Eyes of Laura Mars, Return of a Man Called Horse) before getting ESB, but he also directed one of the worst of the James Bond movies. Marquand has done some good suspense stuff (Eye of the Needle, Jagged Edge) but he wasn’t top-tier by any stretch. So why were their entries in the SW pantheon better than their other movies? It would have to be the strength of the material and the franchise, for which credit has to be given to Lucas.
It’s no secret that Lucas doesn’t like working with actors–he never has. I think he’s capable of overcoming it, though. Certainly he did in Graffiti. But I think it’s a little too facile to write him off completely as a director. I think the direction in TPM was pretty creaky, and it showed Lucas’ discomfort behind the camera after such a long lapse. AOTC, though, was a little different animal.
In terms of working with actors, I think he’s no worse than he was before, but no better, either. And he’s putting big demands on his actors by having them do so much bluescreen work. But I wouldn’t want him to just go back to guys in rubber masks for the alien characters. He does use physical stand-ins during shooting (including using the voice actors themselves as much as possible), so the actors have an eyeline and someone to play off of. But, let’s face it–while the cantina scene and Jabba’s palace are fun, the aliens look pretty fake. I don’t think that, given the changes in technology since 1983 (let alone 1977) we could accept that level of fakery with nonhuman characters enough to adequately suspend disbelief.
Now, in terms of framing and shot selection, I think Lucas has improved a lot over TPM. There are only so many ways to shoot dialogue without getting overly artsy, and AOTC is dialogue-heavy. Nobody goes into an SW film expecting artsy direction. The very nature of the movies – as latter-day adventure serials – precludes artsy direction anyway. Some of the direction in the final battle scenes of AOTC struck me as a little better than what Lucas has done before: some handheld shots (or simulated handheld, anyway), fast zooms to take viewers into parts of the action (much like combat photographers in real life), a good sense of scale.
The CGI: This is a complaint I’m tired of hearing. A moviemaker decides to make his alien worlds fully populated, and look lived-in and used? Horrors! Would that more filmmakers paid that level of attention to things going on in the background. I didn’t find them distracting at all. I think Lucas has somewhat shot himself in the foot, though. I saw both the 35mm film projection and the digital projection, and the digital wins, hands down. The 35mm just isn’t capable of showing the effects the way they were shot. And even then, digital theaters are showing the movie at a lower resolution than it was shot at. He’s definitely letting the technology try to lead the marketplace rather than vice-versa, but that’s a minor complaint to me.
Lucas has said many times that, in his ideal world, the SW movies would be silent movies, with just the images and the music to tell the story. It’s my opinion that he’s skirting a little to close to that line, and allowing the dialogue and the performances to be more perfunctory than strictly necessary to achieve his vision.
In my own best-of-all-worlds scenario, he’d bring Kasdan, his most successful collaborator, aboard for Episode III, and direct it himself. I think he is capable of directing actors well, and I think with just the right screenplay, and the experience in front of bluescreens that came from working on AOTC, the actors could put more into it than George is asking for, satisfying him and themselves.