There were a few things wrong with them (painful to look at while operating, and the bulbs tended to burn out if you moved them around while turned on) but fundamentally I don't think they were broken technology. Overhead projectors would be well complimented by computer projectors, but computer projectors make a poor replacement for them. Attempts to replicate the advantages of overhead projectors on computer projectors always fall flat, as far as I have seen.
I think the demise of overhead projectors is an example of a regression caused by our tendency to have rose-tinted glasses whenever considering more technological alternatives to existing technology.