That's fine, really. Every House is pretty much a thinly veiled cultural/racial stereotype. We don't need to go over them all. Some are really far more offensive to the cultures they represent (the 1980s were not the most PC decade).
The Lyrans are predominantly German in culture, apart from those troublesome separatist Scots (Isle of Skye- if you haven't put two and two together, that's a nickname in actual real world today for actual real world Scotland). Nowadays we're familiar with German culture's more harmless side- techno, schnitzel, uptightness, a strong economy. That's nothing bad- believe me, I was stationed in Germany for three years and loved every minute.
But there's one word always floating around there, just below everyone's notice, and nobody really wants to mention it when we're playing a fun Space Pew Pew Robot game.
Nazis.
German military tradition is what has kept Germany fighting above its weight class the last 150 years; to be frank, it has picked fights in the last century it had no business winning except for its industrial might and strong military; the WWII Wehrmacht was probably the most copied and studied army of any nation at any time in history. At some point the stereotype of the deadly serious German soldier embedded itself as deeply as the (far more unfair, historically inaccurate) one of the French "cheese-eating surrender monkey".
So why, in any piece of fiction or fluff from the original game (and plenty from later on in the timeline), do the Space Germans suck so bad at...actually fighting a war?
Because of a conscious effort on the part of the original source authors to eliminate any potential Nazi imagery or parallels. Remember, tabletop wargame grognards already have a fairly unhealthy Wehrmacht Worship Complex (just point out any of Rommel's very real shortcomings over a tabletop and watch the profanities fly), and a strong Lyran military steamrollering Marik and Kurita units in a few pieces of game fluff is all it would take before your next tabletop game would be against an angry fat guy in his 40s with a buzzcut and a bunch of miniatures with SS lightning bolts and Death's Heads all over them.
So to avoid all this unpleasantness, a new cultural stereotype. Not the lean and mean German with the iconic helmet and the thousand-yard stare. Instead, the fat bearded Prussian aristocrat, full of beer and mutton and barely able to squeeze into his Assault Mech. Instead of the German tradition of junior officers showing initiative and the de facto requirement that senior officers come from combat arms, the Prussian tradition of aristocratic appointees, and the usual choice of second and third sons (ie those not in line for family titles) to accept cushy military positions. Instead of the (practically German-invented) close training of combined arms, we have the big, ponderous artilllery pieces of their day (ie, Assault Mechs). Instead of the cultural obsession with accurate intel and recon, we have senior officers who have no use for anything under 80 tons.
In short- FASA made you guys fat, slow and incompetent on purpose. They'd rather have Elsies than Nazis. Just look at the FedCom Alliance- they were trolling you all along. It took the Space French to show you how to fight
