He started off as the villian and was very one-dimensional. I think once he became a regular around episode 100, when he was added to the credits, he became more three dimensional. Alan's death and finding out Bobby was his daughter really started this process.
There are times when you feel sorry for Fisher: the deaths of his children, the breakdown of his marriage, losing his home in the bushfires, Judith choosing Joel over him (does anyone remember that bizarre dream sequence?) and Pippa rejecting him when he developed feelings for her after Tom died and then getting involved with Michael a few months later. I haven't seen his 2007 return, but I've heard that is very tragic too.
By the mid-late 90s, he did, as you say, became the mug in a few situations. While Marilyn and Fisher were good as individual characters, their relationship really weakened both characters and I don't think he really recovered from that. Although Fisher is one of my all-time favourite characters, I really am struggling to remember anything he did after late 2000, other than writing "A Letter to Byron" with Hayley and his relationship with Rowena Wallace's character. I can't even really recall him having that many scenes with Seb.