What "A prophecy that misread could have been" actually means
Every time I say that Palpatine’s return in The Rise of Skywalker ruins Anakin’s arc in Return of the Jedi, where he saves his son and eliminates the Emperor, fans insist that the Jedi were wrong. They claim that the true "balance of the Force" is a literal balance between light and darkness, and that Anakin brought balance by leaving the exact same number of Jedi and Sith alive at the end of Episode III. They defend this stance by hiding behind Yoda’s line: "A prophecy that misread could have been."
Alright, let’s break this down piece by piece.
George Lucas has stated across various media, such as the Prequel DVD documentaries, The Clone Wars audio commentaries, and The Star Wars Archives book, that the true essence of the Force is the Light, that the dark side is a cancer, and that Anakin restores balance to the universe by exterminating Palpatine at the end of Episode VI. Therefore, you cannot rely on the personal assumptions of other characters when the original creator of the saga confirms that "balance" means the absence of evil.
Having cleared up the most important part, what did Yoda actually mean by "A prophecy that misread could have been"?
Simple: everyone assumed Anakin would bring balance, but nobody knew exactly how.
In the final arc of The Clone Wars Season 6 (Episodes 11, 12, and 13), Master Yoda goes on a spiritual journey guided by Qui-Gon Jinn and the Force Priestesses. During his journey, Yoda must pass several spiritual trials to learn how to retain his consciousness after death and become a Force ghost, and what he discovers is crucial. He faces his own arrogance in the form of a "Dark Yoda," realizing that the Jedi were neither perfect nor free of flaws. In his final trial, he is given the chance to learn the true identity of the Sith Lord controlling the Senate and manipulating the Clone Wars (Chancellor Palpatine) before the tragic events of Episode III unfold. However, instead of giving in to the temptation of exposing Darth Sidious to save the Jedi Order from its imminent fall, Yoda chooses to forfeit that information. By doing so, he grasps the true meaning of the Prophecy; he understands that Anakin Skywalker truly is the Chosen One and that his destiny is to bring balance, which is why he chooses to save Anakin's life in his vision instead of letting him die. The Priestesses make it clear to Yoda that the Jedi Order will fall and that they will not win the current war. However, through their faith in the Chosen One, they will plant the seed for a greater victory: "Not victory in the Clone Wars, but victory for all time."
J.J. Abrams threw all this lore into the trash with The Rise of Skywalker. If Palpatine survived (or returned in a clone body), Anakin’s ultimate sacrifice in Episode VI to save Luke and destroy the Sith loses all its value. Yoda’s entire painful acceptance in The Clone Wars, where he lets the Order fall while trusting in a "victory for all time" through Anakin, becomes utterly pointless if the Sith threat was merely paused for a few decades. The Emperor's return is a cheap, improvised excuse by Disney solely to boost the box office, completely ignoring the fundamental rules of Lucas's own mythology.
So please, stop spamming that Yoda scene from Episode III out of context. Thank you very much.