the problem with devito was the writing.
See, sometimes, for better or for worse, Batman writers like to "borrow" villains from Batman's disabled, cooler, scarier, and slightly
more insane counterpart at marvel comics. Examples-
Bane=Nuke
Phantasm=Mr. Fear
Lady Shiva=Elektra
and in this case, the penguin was actually the owl. Now unlike daredevil's flying mutant dork, danny devito was too stupid to be scary, couldn't fly, and couldn't fight all that well. Hence the problems. the two tim burton batman movies were great movies. They just weren't batman movies.
I think that the penguin character, created for batman returns, really sucked. Its kinda hard to judge if Devito would have been better than Merideth, as the Merideth character was much better and closer to the comics. Had Tim Burton stayed loyal to the comics character, and let Devito play it that way, than perhaps Devito would have been more appealing to all of us. Having said all that though, Merideth played a kick ass penguin, and he will always remain a tough one to top, regardless of how crappy the old 60's shows looked.