I haven't actually played Persona 2 (something I wish to remedy soon), but it's really not that hard to see why Izanami might be considered a poor villain. I can understand, in fact, I quite like a number of aspects to it. It's a big metaphor for the Japanese creation myth, if Yomotsu Hirasaka didn't make that obvious. I know that they took some pains to make sure there were some 'hints' to allude to her identity. But at the end of the day, the heart of the truth that we all sought was... well, a gas station attendant. It's not exactly climactic stuff, and I don't think they give it much its' due. It feels very... condensed, for lack of a better word. She's the core of the mystery, the 'source', and at the end of the day, I don't think they do a lot with her one she's outed. It's a bit dissatisfying, as far as closure to the 'mystery' goes.
Without knowing much about Persona 2, one can't help but think that's a bit of a step down from the Crawling Chaos.
That said, the last few minutes of Izanami's boss fight is easily one of the most memorable moments I've had in a video game.