As said above, creature MR is a major problem. Might 50 is supposed to be virtually immune to Hermetic magic; it isn't. Read up on the core-book's dragon (Stellatus, IIRC). I believe in one gamer's game hunting him down was taken up, for sport, by a few mid-aged Flambeau. It really isn't that difficult.
The ability to permanently destroy angels and demons with PeVi makes this even more ridiculous. It isn't that hard to kill the princes of hell, or (if he ever stops hiding beyond that pesky Lunar Sphere) Michael. And I'm not talking about the Order's mightiest wizard defeating Michael as the culmination of a great saga. Just a middling covenant with an appropriate middling specialist and with some determination and/or resources on their hands (say, both Arts at 20 [die 6 + Te 20 + Fo 20 + focus 20 + 5 talisman + penetration ability 5 + virtues for say 5 + 30 from raw vis]; use a 5-member Wizard's Communion, and you can cast a level-50 spell with 100 penetration, draining him to death in two rounds). [This is just one constellation; the bottom line is that between obscenely high Arts, powerful Virtues, and options to massively increase penetration such as wizard's communion, raw vis, or arcane and sympathetic connections - magi's penetration is just too high.]
Another major problem is that elder magi can create huge and powerful magical effects, that would drastically affect the setting and history. Yet history isn't filled with them. You can rationalize your around this (I believe Transforming Mythic Europe does), but ultimately magi are just too powerful for the setting.
Another major problem is the relationship with mundanes. Mundane armies and mobs are largely of no consequence, a hindrance rather than a threat to any well-prepared covenant. Again, treating mundanes with the respect they're due in the setting and accommodating bits of Hermetic history related to them can be done with enough hand waving, but for me at least it feels very forced. Often this comes down to Divine power, which is not relevant to magic's ancient history (so Mercurian magic was pretty weak, huh?) and cheapens the mundanes. Not to mention that official Divine magic is seemingly rare and isn't all that powerful really (putting aside direct divine intervention, which is just DM fiat desperately trying to use the ultimate hammer to keep some semblance of verisimilitude); while the Divine Host is an incoherent multitude that would flood the world with the supernatural, but that's another story.
Then there is the fact that Ars Mgica is supposed to build on real myth and folklore. A lot of these stories actually use very minor magic. Merlin didn't vanquish Arthur's enemies with flamboyant spells and what won the titanomachia was a helmet of invisibility. This point is inconsistent - there is plenty of magic in those stories Hermetic magi will find hard or even impossible to pull off - but still, broadly speaking, Hermetic magi are just waaay more powerful to fit into many ancient stories.
Finally, I personally think that too much power robs us of story potential, regardless of how it fits with the flavor text. The possibility of fast travel was already mentioned above. Mind reading and coercion is also a major culprit for me. The ease of invisibility is also a problem.
Anyway, this is all a YSMV (Your Saga May Vary) thing. You can rationalize your way around things, or read the setting differently. But for my tastes, Ars Magica wizards are just too powerful and need to be put in their proper place.
[Edited slightly, for clarity.]