I have a love/hate relationship with this episode... I really think it's dreadful, but I keep trying to force myself to give it a chance.
While it's true that there are a few chuckle-worthy bits (the Italian standup, pillow pets, and the Reagan opening), it's just not a very entertaining show. This is one of the episodes where the audience's almost complete lack of response becomes nerve-wracking, because sketch after sketch is met with dead silence. With good reason.
So many sketches in this show are just awful - Name That Sin, Was I Ever Red, and Lean Acres come to mind. Was I Ever Red ranks high on the list of examples of why people thought this season was so horrible... something to do with a dinner party that involves cooking pets and an old lady choking on vomit. (Despite what you might think, Michael O'Donoghue DIDN'T write that one; he didn't return until the next season.) The mass of hostage-related material is extremely irritating, to the point where it just becomes tasteless. By the end of the episode, the audience appears to have just completely lost interest in the actors and the mediocre material they're performing.
While not the most absolutely unwatchable episode of the season, it starts promising and falls INCREDIBLY fast. Skip this one.