Here is the reason it doesn't work, I have said this in countless Fantasmic debates, but I never grow tired of sharing.
Fantasmic was designed in a place it never seemed like it could exist. They built the show into an existing area, an area you can visit and explore throughout your day at Disneyland. The show works far better at Disneyland because it truly does seem like it came from the world of imagination. One moment you're on that very island, or walking along the river, the next; lighting rigs appear out of the stage, the rivers on fire, and a 40 foot dragon has made the island her home... all seemingly out of nowhere. With the final chords of music everyone folds in upon itself and is gone, as if it never really happened. Was that real? Did we just imagine that?
Fantasmic was designed brilliantly by the original creative team. They created a show that truly bleeds magic.
So why doesn't this work as well at DHS? Well, while the stadium is nice, it ruins the entire purpose of the show, that entire feeling you get at Disneyland. The purpose of the show is to create something unexpected, something truly from Mickey's imagination, you don't really know what Fantasmic is when you see the description in the entertainment guide, you just sit along the river (or stand) and wait to be amazed. Walking into a giant stadium, with lighting rigs hanging over the audience... you know what to expect, you have lost the element of surprise. Then you bloat the show out with extended water screen moments, a far less impressive middle segment with Pocahontas, and a finale that just doesn't feel as grand as Disneyland's. Add in the lack of technological upgrades since the debut... and you have a Fantasmic, that while still spectacular, falls incredibly short of it's older sister out west.
If Disneyland's Fantasmic is rated an A+ (my opinion) I'd give DHS's a C+, and yes, I have experienced both.