First of all: Tree Hugger. Come on, you've got to be kidding. Believable characters have always been one of MLP:FiM's strongest points, but Tree Hugger was basically a gimmick on four legs without any obvious personality or depth, or any character concept that went beyond "hippie cliché". MLP has previously shown that it can handle tougher challenges, e.g. when Cheese Sandwich turned out to be a great character despite only having been created so Weird Al could guest-star on the show; so why aimed so low with Tree Hugger is beyond me.
Second: the Smooze. That one turned out to be less headdesk-inducing than I expected, thanks to Discord; bringing a creature like that (and pulling it from Celestia-only-knows what dimension) is exactly what he'd do, so at least it had a good reason for being there, and for being crazy. Also, there's something inherently amusing about gelatinous blobs in top hats wrecking pony galas.
Beyond toy marketing (hmm, I wonder if there's a gak stockpile somewhere that someone wants to sell), I think the motivation for Tree Hugger in particular was comedy, and that's what this episode had a bit too much of. I'm not talking about Discord's routine, either; I'm talking about little things, like AJ blowing her nose into Dash's tail. Really? It's hard to take the show seriously with things like that going on in the background. Fun is important, sure, and having little things go in the background is always a plus, but please, let's not turn it into a standup comedy show.
Discord was nice, at least. Seeing his own dimension was fun, and he was well-written; petty, perhaps, but that's not necessarily out-of-character for him. The basic plot with him getting jealous after feeling that Fluttershy was abandoning him was good, too: not "well played, Fluttershy" material, but solid enough.
That said, it could've been more still. Fluttershy almost seemed like she was in love with Tree Hugger to me at times; it would've been nice if the focus had been on her a bit more as well, not just on Discord's (admittedly entertaining) reactions to every new slight, real or imagined.
And then there's the resolution, which was just far too weak. First Tree Hugger tamed the Smooze with her "calming auditory therapy"; why this worked, or why she would know it does, was never explained, and Fluttershy's comment ("That was the most magical thing I've ever seen done with animals!") only made it worse, drawing attention to the lack of any credible explanation by trying to present one and failing. And just a little later Fluttershy then just right out says that she and Discord are still friends, and Discord has his epiphany that he's made a mistake, and apologizes, and that's it; all is well again. It's in stark contrast to "Keep Calm and Flutter On": in that episode, everything that Fluttershy did built up to that one moment of realization, and when it hit, it did so like a ton of bricks. Here? It just came out of thin air.
So, again — the potential was there, but it wasn't used.
Other observations: there was no song, alas. Maud made an appearance, but wasn't used too well; she deserves a bit more than deadpan jokes. Her line "you're the most basic of jokes" may have been a Spongebob reference. Discord's "other dimension" that he threatened to throw Tree Hugger into also didn't fit the feel of the show, even if it IS Discord we're talking about. Did Celestia get a different voice actor? She sounded different to me. Celestia also wins the "best face" award, for the "This has been the most fun Gala in years!" segment; AJ, meanwhile, wins the "craziest hat" award (didn't Rarity learn anything about letting the rest of the Mane Six design their own dresses in Suited for Success?). And despite what Celestia said about it being fun, this is the second Grand Galloping Gala that the Mane Six (directly or indirectly) wrecked now; I wonder for how much longer they'll keep getting tickets. :) And finally, where was Spike at the Gala at all? I didn't see him.
Elsewhere: discussion in broniesaremagic.