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Other than fumbling the story and atmosphere as already mentioned, its biggest problem was being on the gamecube.
It was a quick, low budget asset flip that came at the end of the generation. The gamecube got crushed by the ps2, the xbox and halo cornered the market on multiplayer, and with the wii on its way nobody was going to be buying a console just to play this game. Pokemon's popularity was at an all time low, all the pokemania kids had spent the past few years parroting that pokemon is for babies and they're big kids now, and gen 1 wasn't long ago enough for their remakes to cause a nostalgia wave to bring people back. They also made xd a direct sequel which made it less likely anyone who skipped or disliked colosseum would pick it up, and the bulk of the marketing focused on shadow lugia so all anyone knew was that we'd be getting more of the same with the biggest hook being a special form we obviously couldn't even keep/use in main series. So there was a pretty limited audience right from the start and they didn't highlight what actually made the game good to draw people in.
Given the size of the studio either putting xd out meant the start of pbr's development got pushed back or them needing to get moving on pbr lead to xd getting rushed out the door. Imagine if they dropped pbr and spent more time polishing xd into a wii launch title: the hardware's backwards compatible even allowing gamecube inputs in wii games so they still could have used it as a way to finish off the gen 3 roster, some of the features they developed for pbr could have made it into xd instead like different colosseum rulesets and online battles while improving the existing features, bigger rom size means more new areas could have been added without cutting any of the old ones, updates meant it could have gotten a full gen 4 patch, and they could have wrote a less repetitive/rehashed plot.