tl;dr: ArM is a game for academic nerds who like to spend more time twiddling dials than engaging in heroics. ArM isn't popular for the same reason old-school wargames aren't popular: too much work for too little payoff.
Wow! Deliberately controversial much?
There's some minor truths in this; the game isn't, at its core, about
encouraging you to be heroic. If you're heroic, in Ars Magica, you run a fairly high risk of coming to a bad end. Some might suggest (in fact, I will) that this makes heroism more meaningful, as well as more thrilling.
Much of the rest simply isn't true: Ars Magica by default
is a game about slowly acquiring power, but the power you gain isn't the power to divert funding from a rival's research program (as a college dean might), it's the power to destroy an army with a wave of your hand; to pull a dragon out of the sky and smash its brains on a valley floor; to create a fertile plain where a desert once was. All that kind of thing: you know, actual cosmic power. Magic like it is sometimes portrayed in novels, not like it usually is in games.
Some other games attempt this; some games give it to you relatively cheaply. Ars Magica doesn't. An archmage will probably be two or three hundred years old, and he'll have spent much of that time studying and experimenting. I can certainly understand not wanting to play through that study, but I find it a little ironic any roleplaying fan calling any other "an academic nerd". Oh, how things have changed!
I'm in the middle of running an Ars Magica campaign; we're trying it as it is meant to be played - more-or-less troupe style, slow advancement, trying to turn an abandoned border fort into a legacy worthy of a covenant of magi. But despite what some might say, we've had a LOT of drama, high-jinks, and even heroics. I mean, I could give anecdotes, but we know how dull it can be listening to someone tell you about his awesome campaign. It's awesome, okay? A little trust goes a long way.
As I remember it, combat was pretty deadly too. If you got into a fight, someone in your party was going to die and they weren't coming back. This served to reinforce the point that the wizard wants to stay at home: it takes hours to make a magi and that time would be lost forever the first time they found themselves in a fight. That fragility also means you don't want to emotionally invest in the characters you actually do the heroic stuff with, the supposedly bit player companions and grogs.
Combat in Ars Magica 5th edition is brutal, but not especially deadly; most battles, if you lose, you'll end up bleeding to death that night or at some point in the week. If the enemy doesn't grant you a merciful release. But, given that this game is about magi, they can heal you (although healing isn't as cheap or easy as it is in most fantasy games); this means in practice, the game gives characters who've been defeated in combat a way to recover and not be ruined.
In my own campaign (which is awesome, by the way), we've had one character killed outright in combat, by a gnarly stone demon thing. One other character died slowly after being poisoned, taking a month to perish, because the magus healer didn't have a spell that could handle the poisoning. So that's two characters, in the space of around, I don't know, 10 long sessions representing perhaps three years of game time.
People certainly get emotionally invested in the grogs; the very fact they're bit players means that their characterisation can be strong instead of subtle, and hence, memorable and fun in an immediate way. Companions are essentially just as much your PC as your magus is, so it's inaccurate to describe them as bit players. They can be very very cool.
In short, it's a great game. It may not be to your taste, but that's the world isn't it? For some reason, there isn't one thing that everyone thinks is fantastic.
