Recently, Sean Akizuki covered a few incidents of villain decay in Super Sentai. In Power Rangers, MMPR was particularly notorious for this particularly in season 2 and 3. Here's some examples.
Goldar was the first example. He was Rita's second in command during season 1, and pretty badass. However, in season 2 starting with his loss to an unmorphed Tommy in Green No More, he was routinely beaten easily, usually by Tommy as the White Ranger. The amount of one on one fights between Tommy and Goldar during season 2 was overdone and way too much. By season 3, he was as much of a bumbling idiot if not more so than Rito. The reason for his villain decay is somewhat of a mystery.
Lord Zedd is the most notorious example of villain decay. The suit design along with excellent voice acting by Robert Axelrod made him a pretty fearsome character. However, parents complained to Saban and Fox Network that he was "too scary" for kids. Saban wilt under the pressure and dumbed down his personality to a more comical character after his wedding to Rita late in season 2 and for all of season 3. However, it can be argued that he had more success as a "decayed villain" than he did before the villain decay. Before the villain decay he simply drained away the Green Ranger powers. After the villain decay he destroyed the Thunder Zords, destroyed the Ninja Power Coins, captured Ninjor, the Falcon Zord and the Pink Power Coin, and also succeeded in destroying the Command Center.
At the moment, I can't really think of any other examples of villain decay in Power Rangers. Most of the villains after MMPR pretty much stayed the same, either being badass or just plain sucked from the beginning.