It def needs to be less cartoony and cheesy.
Why? It's pulpy Noir, and it's working really well. Anything less than what it is, and the show would lose what makes it worth watching.
It amazes me that people can praise something like Batman TAS for what it did, and yet criticize this show for not only doing the same thing tonally and aesthetically, but doing it BETTER (yes, I said this show is better than Batman TAS, and I'm being completely serious).
This show embraces the Noir and Pulp genres to a degree that BTAS never did, and is giving the television landscape something that you don't normally see: a good, pulpy, serialized Noir show with just enough procedural elements to let new viewers come on board easily.
"Arkham" is a case-in-point example of this, using the plot device of the Arkham District vote as a fulcrum off of which to pivot the ongoing underlying narrative of the Waynes' murder being more than it seemed and to continue to develop its main characters and point them towards becoming the people we know they become, particularly Bruce Wayne and Oswald Cobblepot.
Cobblepot's scheming to get himself into a position of power and Bruce investigating the politics of the Arkham vote and the murders of several councilmen on both sides of the Arkham issue lay the groundwork for where their individual journeys are headed in ways that the first 3 episodes really hadn't, and also help tie together the rest of the episode's plot threads into a nice cohesive package that makes for a very satisfying self-contained narrative that also makes great use of the series' serialized nature.
We're also given some development on the Jim/Barbara 'homefront', and while it might come across to some people as being overly contrived and 'soapy', I personally think it works because it helps to emphasize the internal conflict that Jim is always going to be dealing with, particularly when it comes to navigating his way through the chaos that is Gotham's social and political climate.
I really like Jada Pinkett Smith's portrayal of Fish Mooney, and her seemingly out-of-place role in this episode made for a nice additional layer of storytelling on top of the Arkham issue, and also gave us a nice tie-back (intentional or not) to The Dark Knight, which I thought was neat. It also doesn't hurt that the character of Liza looks like and reminds me of WWE Diva Paige (which is awesome).
I am kind of surprised that we didn't see Selina, Montoya, Allen, or Falcone here (particularly since Falcone was one of the people backing one side of the Arkham issue), but when you've got as big a main and recurring cast as this show does, certain actors are bound not to show up in every episode.
This episode gets a 9.5 out of 10; it's not only Gotham's best episode so far, it's also the best example of what the series is and why it works so phenomenally well.