You bring me back to my D&D infancy; Cyclopedia is what STARTED me in D&D, I went on to 2e, then 3e from there.
I love it. Really. Barring 3e, its the only other version of D&D I'll play/run. Part of it is nostaligia I guess. However, these are my favorite things...
1.) Simple, but expandable ruleset. Can encompass skills and weapon upgrades, but plays JUST ducky at basic level.
2.) Dominion, siege, and minion rules. Core.
3.) Four classes, 3 racial classes, 2 optional classes. Room to expand if you like.
4.) One book, everything you need from monsters to magic.
5.) Old-skool dungeon feel, but can run JUST about anything.
6.) Plays great out of the book or slathered in houserules.
7.) Three broad alignments.
8.) Most 1e/2e modules work with it (with some conversion), as does ALL basic D&D modules.
My only negatives:
1.) Race/Class Combos are a no-no.
2.) Demihuman level limits.
3.) Not nearely enough magic/treasure/monsters to ensure variety. You'll be hunting modules/supplements or making alot up yourself.
4.) Little/no character customization from a rules perspective. Every fighter is the same, so is every rogue, cleric, etc.
5.) Rules lite: be prepared to ad-hoc rules for unique situations that the CR don't cover.
6.) THAC0 and Downward AC. 5 Save Catagories.
However, if your cool with that, then enjoy. You could also look into Castles & Crusades for the same feeling with upwards AC.