Why did the puppet they used for Yoda in Episode I suck so bad?
The puppet used for Yoda in Star Wars: Episode I - The Phantom Menace received criticism for several reasons:
Design and Appearance
The puppet was designed to depict a younger Yoda, which proved to be challenging. Nick Maley, who worked on Yoda's appearance in The Empire Strikes Back, expressed dissatisfaction with the material and color used for the Phantom Menace puppet, stating it was "built wrong" and had an odd, hairy appearance that made Yoda look "wonky"14.
Realism and Setting
Unlike the jungle environment of Dagobah in the original trilogy, the backdrop of Coruscant in The Phantom Menace made the puppet appear less realistic. The contrast between the detailed, urban setting and the puppet's appearance highlighted its shortcomings4.
Comparison to CGI
The decision to replace the puppet with a CGI version in later releases was partly due to the puppet's lack of fluidity and consistency with the more advanced visual effects of the prequels. The CGI Yoda provided a more uniform look across Episodes II and III, and helped to maintain visual consistency14.
Overall, the combination of an attempt to depict a younger Yoda, the less suitable setting, and the advancements in CGI technology contributed to the negative reception of the puppet in The Phantom Menace.