As I recall it, Tahitian Terrace closed, not because it wasn't popular, but because they thought a Polynesian show was dated, too expensive to stage, and they could charge a whole lot more for an Aladdin dinner show tied to the hit movie (with a chocolate magic lamp for dessert) - and so have a bigger profit margin. But Aladdin's dinner was way too expensive and show not as fun - and it closed very quickly. It was the Aladdin restaurant that replaced TT that flopped (see also the always popular Golden Horseshoe Revue, etc.).
(BTW -- Tahitian Terrace was far and away my favorite Disneyland restaurant back then),