It's rare that we see The Doctor admit how dire the consequences are during any given story, but that's what we get in Episode Four when Sarah suggests to The Doctor that "the worse the situation, the worse your jokes get!" - an observation that The Doctor greets with stony silence. Sarah, realizing the change in mood, quietly asks The Doctor, "Things are bad, aren't they?". "Desperately bad.", replies The Doctor. A scene like this does its best to hammer home some drama to the proceedings.
However, most of this episode is spent waiting - people waiting for the masque to begin, others waiting for Mandragora to swallow the moon, and The Doctor waiting around for Heironymous to show up so he can unleash his plan to take over the Cult of Mandragora. The process in which The Doctor defeats the Cult is also underwhelming. We're meant to believe that there is a ball of fire behind Heironymous's mask, but it merely looks like what it is - a lamp in behind a mask on a stick. When Heironymous's power fades, so does the picture. And it doesn't help that Norman Jones, who played Heironymous, sounds not too dissimilar to Tom Baker when we see that The Doctor used his talents for mimicry to fool the brethren.
Overall, The Masque of Mandragora is not a strong story to start one of Doctor Who's more noteworthy seasons. And just one more question: Marco and Giuliano - were they gay?