One thing that might've really did it in was the fact that the characters couldn't or were hard to be sympathized with except for maybe Rorschach. But Rorschach's bad-ass and I think he was one of the few things Watchmen did really well. Maybe that's just because Moore delved into his character the most, but what the hell. Sufficed to say he was the only one I liked.
You're right though, the storytelling could have used work. I give them points for creativity, it was nice to see that they gave a twist to what you normally see; that was probably why it was called a "masterpiece."
I don't know, Watchmen just seems a bit...shallower than advertised. Maybe with a few more chapters and a shit load of elbow grease they could have pulled it off and made it something mind blowing.
Either way, it's still a fun read. It did something outside the "norm" (sort of) and in some places there was some good dialogue. I like to think of Watchmen as a bit of an experiment in terms of the comic book world. Whether or not it worked is up to the reader.
Oh, sorry Hikariforce, the picture's really nice.