I think anyone who was actually around back then will tell you that there is no comparison between MK2 and any of the MK3 games in terms of general popularity in the arcades. MK2 was an arcade phenomenon, while MK3 was somewhat popular, but generally received as "meh".
I spent a lot of time with UMK3 on the 360 before MK2 came out on PSN.
Here are a few reasons why I think MK2 is better than the MK3 games:
1) The introduction of "dial-a-combos" was originally a ripoff of the Tekken series, and turned a lot of people off of the MK series. It cheapened the feel of the game and lowered the amount of skill needed to be competitive. Now instead of the awe and admiration you feel when your opponent does an impressive juggle combo on you, that feeling is replaced with frustration and boredom while you wait for some scrub to finish his 19-hit dial a combo. You can't do anything during an opponent's combo except hold block and hope he messes up somewhere. Even KI had c-c-c-combo breakers, for fuck's sake! I'll take MK2's juggle combos over that any day. They're much more impressive to watch, and take much more skill to execute.
2) The graphics, sound, and atmosphere in MK2 were a big improvement over MK1. MK3 didn't improve on any of these things, and my theory is that the Run button was introduced partly to compensate for the larger space between opponents due to the fighters being slightly smaller than in MK2. The stages also blow, and more than half of the characters are unoriginal. When they reached the point in development where they were sprite-swapping between like 3 or 4 robots, they should have come to the conclusion that the game needed more time in development.
3) The tier list isn't any more balanced than MK2's. Anyone who wants to win just runs straight to Kabal, Smoke, or maybe Nightwolf.