Yes, I believe the UI is the biggest failing, though I am also not seeing a clarity of vision, which wiki very clearly had (making it absurdly easy to create hypertext documentation for anything). Federated wiki seems to be about "federation", or individual wikis that can link amongst each other as readily as one can link between documents in a single wiki. That's a great idea. Federation may be the only thing that can save us from the walled garden age of Facebook, Google+, Github, etc. (or maybe it can't...the UI is gonna have to be better than this if it is).
So, I agree that it's biggest problem is UI (and that's what I listed above as being wholly wrong about this thing), but I think it's dangerous to underestimate how much design determines the impact of an idea. I've seen lots of really cool ideas come and go, with bad design as the reason it never takes off. And, it's probably a bad idea to underestimate how hard it can be to fix a bad design, if the design is intimately tied to the implementation. I don't know if that's the case here, though there's certainly a lot of bad design ideas that seem to be important to the developers; at least, they must be important to the developers because they made them flash incessantly.
I've poked around some more since posting my initial comment, and I really can't get over how very distracting those flashing icons are, and can't imagine how anyone on the team is OK with it. How can designers of a content system (which a wiki is, at its core) do so much to make the content seem like the least important thing on the page? The user is literally directed to pay attention to everything but the content.
Again, I say all of this with an incredible amount of respect for Ward and the wiki. But, this thing is a mess.
You make good points. I guess I'm more hopeful that the UI is fungible if the core ideas shine through.
I'll be most interested to see if they figure out a way to make federation easier to understand and use. At first I thought I wanted a globally editable central wiki with some company stuff and links out to individual wikis for project notes, developer knowledge base, and journals. It took a while for it to sink in that only the owner could edit the first one and really everyone needs their own to do anything. It's really hard to shift the mindset from shared state to single owner and fork to like, fork to change.