I, personally, think the issue is one of rather severely varying style. The figures closest to the viewer are crisp, perhaps even excessively "realistic," with fairly fine detail put into them. The middle-distance figures are all very impressionistic, and the far-distance figures are like a realistic image was put through some Gaussian blur. In particular, the dragon has details fuzzed--except at the edges of the image, where "dragon" vs "not dragon" is quite sharp.
I think this is where the "uncanny" feeling comes from for folks--the image doesn't really stick to a single way of doing things, but blends together three or even four different ways of presenting depth and detail.
I genuinely have no idea if this was the work of a single person or many people cooperating, but it kinda comes across as collaborative art where the collaborators didn't start talking until each person's piece was nearly finished. So the dragon and the crowd are semi-impressionist, blobs of color vaguely shaped like people, the middle-distance figures are low-detail as though out of focus (as one might expect), and the foreground characters are rendered in almost excessive detail--but every figure (except the crowd) has sharp, well-defined edges, rather than blurring with their surroundings.
It's just a really odd composition choice. It doesn't harm my enjoyment of the dragon at the center, personally, but I can totally see how it would have some uncanny feels for others.