For the time it came out he NAILED it right on the money.
Remember, all we had before Nicholson's Joker was Caser Romero as the joker from the Batman campy TV show. And Nicholsn's Joker was a lot closer to the Joker than that by any strecth of the imagination.
So from what we had to compare with what we previous seen, A campy joker with a white mustache, Nicholson was nailed on. Still, Nicholson performance holds up well even till today. And he was more than scary enough.
However I would have love to see Nicholson portrayed the Joker in the early 80s right after the shinning when he was a little slimmer and I think e would've been REALLY on the money.
IF they would've made the Batman movie back then (like it was orignally intended) Nicholson would been even better.