Like many others I, too, wish they had made more episodes. It was a fun show with lots of laughs. One of the highlights was the relationship b/t Mavis (Fleur Bennett) and Mr. Humphries (John Inman). They had a real chemistry and spark together.

The "variety show" would have made more sense as a final episode; in the tradition of the AYBS Xmas episodes and the final AYBS was them all performing/singing one last time. That said I thought this series in total was pretty awful and at best half as good as AYBS.

So true. I always thought the sequence of episodes in Season 2 was off: I thought the series finale should have been the "variety show" they performed for the visiting foreigners, not the sheep-stealing one. I honestly think they thought a third season was in the works when they set up that schedule.
English MA: Symbolism/my life. "Truth vs the world" - Boudicca of the Iceni

Another poster mentioned that a third series had been written (or at least storyboarded), so this was never intended to be the series finale.
The BBC network canceled the show allegedly because the channel went in a different direction (whatever that means). Burden's death had nothing to do with the cancelation. Oh, and replacing him with relative who inherits the farm would be a plot hole. The farm is in trust to the Grace Bros pension fundhe wasn't the legal owner.

I'm in adoration of Ms. Bennett as well
But if the show was put on ice because of Mr. Burden's death His character was strong enough and he was a funny actor, but the ensemble piece - technically - could have moved forward if they wanted to.
But at least two seasons' worth were made.. 'tis better than none!

It is my understanding that in 1994 Billy Burden (Mr. Moulterd) died suddenly. Evidently he was such a central character, they couldn't replace him. (Why not a brother or other relative who inherited the farm?) Too bad. Wife and I are watching the old gang go through their high-jinks again in Nov. 2010 and enjoying every minute of it. Oh yeah, don't tell the missus, but I'm in love with Fleur Bennett.

Yes, that is the last episode.

Is the last episode the one where they steal thier sheep back from the neighbor?

Because they didn't know that this will be the last episode ever made. Sad