Going to see it tomorrow, if I can get tickets. My interpretation of the extinction of the Jedi Knights is that, not unlike the ancient Japanese samurai, they were a relic of an older, more civilized time when one could indeed effectively keep order with a few powers and a light saber. From Episode I, I got the impression that, despite the formidable weaponry on the side of the bad guys, they were still terrified of the Jedi. When the bad guys in Japan started using armies and really big guns, the samurai faded, and no doubt the same is true of the Jedi. It probably didn't help that an evil Jedi was in charge of the bad guys. Hey, the Empire DID apparently kill them all (except Yoda and Kenobi), right?

BTW, if I refused to see movies just because they had gaping plot holes, I probably wouldn't see any.