What was the reason that the Me'or Einayim by Azariah deRossi's was considered problematic and what is its Historical development and signifigance of this book Basicly what was all the fuss about?
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As I understand it:
DeRossi takes a series of statements from the Gemara (generally Aggadic, i.e. non-Halachic ones) and applied the scientific and/or historic knowledge of his time to them; some of the statements worked, and some of them didn't. And some Gemaras "just didn't make sense."
(Now hundreds of years earlier, R' Sharira Gaon of Pumbedisa had already said that the rabbis of the Talmud weren't doctors, and were just recording the medicine of their day.)
Maharal argues strongly that there was incredible wisdom in all portions of the Talmud; many of the confusing Aggadic statements were intended as allegory, or had a hidden meaning; or occasionally, described something in terms of the common science of the day to make a spiritual point; not necessarily that Chazal agreed with that science (let's say for instance Sun going around the Earth), but it made the point to the audience in the year 500. (while not quite the same, if you look at some rabbi's sermons today about "Torah is how you recharge your batteries" or the like, that sermon would look funny 500 years ago, and will probably look funny 500 years from now.)
So Meor Einayim is a somewhat dangerous book -- "here's a bunch of places where the Gemara makes no sense", but it seems that generally the rabbinic response was as follows: The Talmud contains incredible wisdom, and people can miss that if they only read these snippets. Even for these snippets, we can and should find deeper meaning. Rather than ban Meor Einayim, it was strongly refuted ideologically by other works (such as Maharal, where he explained the deeper meaning of one statement after another; if not for DeRossi's challenge, would we have these explanations now?), and/or occasionally limited to those with more maturity and Talmudic background. If you've seen 5000 undeniably wise statements of Chazal and then you come across 20 statements that are difficult, you try to understand the 20. If you've never heard of Chazal before and just read the 20, people can get the wrong idea.
What happened was that R. Azaryah de Rossi was in the right place at the wrong time. He openly scrutinized non-halakhic parts of Chazal, such as historical components. This is totally consistent with the general attitude of all known Geonim including R. Sa’adya Gaon, Rav Sherira Gaon, Rav Shmuel bar Chofni Gaon, and Rav Hai Gaon, who do not look at everything that Chazal said as reflective of their tradition, but rather look at the non-halakhic components as reflective of those sages’ personal views. This was the predominant view among the Rishonim as well, espoused by Rambam, Ramban, and many others. In recent times as well, such ideas are back in the vogue among the modern Orthodox, beginning with Italy after the Renaissance (i.e. the time of the Meor Einayim), and in Germany with the response to Enlightenment (beginning in the late 18th century).
The Me’or Einayim was unlucky enough to find himself in the period of powerful fundamentalism, following the fall of the Geonic-Early Spanish tradition, but before the Italian Renaissance was in full swing. In a famous lecture R. Herchel Shachter, after noting the many Rishonim and Acharonim who doubt the veracity of Chazal’s historical accounts, says that he does not think that in the Meor Einayim lived today he would be so controversial (given the massive weight of rabbinic precedent for his views):
As noted by R. Chaim Eisen, Maharal’s extremely dogmatic views have little to no precedent, even among the generally more fundamentalist Ashkenazim. Interestingly, Maharal did not intend to disagree with the giants of the past, he admits to not having seen the Geonic sources that the ME cites, and expresses surprise that they would say such things, and he gives a new spin to a Geonic statement about the inability to use aggadot as proof-texts (unsurprisingly, his explanation is contrary to the Geonim’s own interpretation of their own expression).
To give Maharal the benefit of the doubt, we can suggest that if he were aware of how radical his own position was, and how solid the support was for ME he would not have disagreed so sharply.
Sources aside, to appreciate what is bothering Maharal so much, we can look at the matter of rabbinic authority generally. According to Rambam it stems from a formal obligation to obey their interpretations, and legislation, mandated by the Torah. According to Ramban, however, the obligation to listen to them is not Biblical. Accordingly, it appears that according to Ramban, rabbinic authority is its own axiom. With such a worldview, it is dangerous to cast doubt on the authority of any statement of Chazal, as their authority had been thought to be axiomatic. [In Rambam’s view however, rabbinic authority is firmly ensconced in its formally mandated structure; the Torah gives authority over legal matters, but nothing else. In such a worldview there is little danger in disagreeing with something non-literal.]
R. Jose Faur, thus explains the general view of Maharal, et al. as being an extension of the general attitude of Ramban. It is important to note, that in spite of the initial opposition, the ME became a fairly popular reference work for matters of realia and Chazal. The S’de Chemed  explains this phenomenon in light of the fact that the fundamentalists’ ban on ME was never promulgated, which he views a divine sign of vindication of ME.
 vol. 9, Klalei HaPoskim 15:39.