I've played Palladium fantasy several times with a really bad DM. I think even a good DM would have had problems with the rules, though.
The rules are terrible. I've played 2e and feel I'm qualified to compare; the rules are actually worse.
Character generation is broken. Like DnD 2e, point buy was either not an option or we weren't allowed to know of that option. You had to roll your stats in order, and the DM wouldn't let us change that order because many of the races had weird stats (eg roll 3d6 for Physical Strength, roll 4d6 for Physical Prowess, etc). Lots of core races got overpowered stats; I think elves got +6 P.P., and trolls (core!?!) got huge bonuses for P.S. If you roll an 18, or maybe it was even any time you got a 6 on a d6, you were entitled to add extra dice, so your stats inflated fast. The bonuses for really high stats was broken because (and only because) of the high stats you could get. Then there were the skills, some of which would boost stats yet again. I always took Boxing, Running and one more (I forget which) to get the extra attacks, but when trying to avoid the other ones (bumped stats too much) I was actually told by the DM to take them.
Getting a character with a high P.P. compared to a not-so-high P.S. seemed unavoidable, even when avoiding the physical skills. This was true even for elves (who had really high P.P. scores).
Sometimes stats could be underpowered, too. Why did you need to roll 3d6 for speed? What if you roll a 6? That means you're just a slowpoke. Most reasonably healthy people are capable of walking at the same speed, out of combat and even in. Note that if you rolled low for a stat you were screwed, especially if you had a DM that wouldn't let you arrange stats to taste.
The Two-Weapon Fighting rules were busted. They were so good there was no reason not to take it. The only way to get them was to take Martial Arts: Assassin and eventually even our munchkin monty haul DM had to ban that.
The skills system was wimpy. Getting to the 50% mark took a lot of levels; even when taking secondary skills that might boost a primary skill by 20%, you still saw low numbers (eg below 50%). There were also way too many skills that should have been consolidated, such as Ambush being a different skill from Prowl. IIRC you took skill penalties for being psychic, but I played a psychic character once and wasn't made to take any penalties.
I have particular loathing for the Cleric rules. I never played a cleric, but we had this player who would always play an evil cleric (not that he ever acted it). Many of the abilities (regardless of alignment) were really wimpy. Make a prayer roll; 18% chance of success. Make another roll to use any other ability; if you're lucky, the chance of pulling it off is 30% + 3% per level. Getting to the 50% mark would take a really long time.
The combat rules needed a bit of help, especially the parry vs dodge rules. Parrying was so much better than dodging (due to not taking up an action) that if someone shot at you with an arrow, you were supposed to parry rather than dodge! There was also huge penalties to avoiding ranged attacks for some unknown reason; an arrow is fast, but then so is a sword, so why should avoiding an arrow be so hard?
Psionics were just broken. I played a psionic character once and realized why the DM thought it was broken. Couldn't they have added some kind of metacap? My character, at 1st-level, with an M.E. of 14 (reasonable stat, equivalent to Wisdom 14... heck, that's actually pretty low for a psychic) was capable of instantly killing any PC in the party, twice, due to hit point damage (it wasn't save or die). I discovered this when I killed a bear; I pumped half my ISPs into the attack and it was sheer overkill. Any non-psychic had a 25-30% chance of saving against my attacks. Even the uber-angel he summoned to smack down a bad PC with too much magical gear could be killed (50% chance of making their save because the angel was psychic). I had more than enough ISP to blast through any halfway reasonable number of hit points; due to the metacap not being there. The more balanced Evil Eye never seemed to work, even though statistically it should have.