Best. Tom Baker serial. EVAR.
Why? Not just because of the historical elements. Victoriana and Doctor Who get along like bread and butter, no surprise there.
Not just because it's a Sarah-Jane/4Doc story. The fact that they're the best Doctor-Companion pairing PERIOD is a given. Okay, I've got a fondness for Ace-7Doc and Jamie-2Doc, but there's no real comparison. Sarah wasn't the Doctor's mental equal, but she damned well was willing to talk back to him when he was getting overly arrogant, and could actaully annoy him because she could occasionally be more clever than he was, unlike some Companions (cough-cough Adric cough-cough) who just got run over by the Doctor's indomitable will.
It sure isn't because of Sutekh's portrayal. Murderous megalomaniacs that will DESTROY THE UNIVERSE are a dime a dozen in this series.
Why then, is this considered one of the classic Doctor Who stories?
Because through the whole thing, the Doctor is running scared.
From the start, as soon as the Doctor realizes who he's up against, he's got an Oh, sh*t expression on his face, occasionally supplemented by genuine fear, followed by snappish crankiness at the humans around him, who are asking "What do we do next, Doctor?" and the only answer he can give them is "I don't know." Just ask yourself how many times the Doctor has uttered those words in the series, compared to some glib throwaway line to cover himself while he thinks up something clever.
He's scared, and therefore vulnerable. We rarely really fear for the Doctor's safety in the later years of the show, because the trend towards making him a real (if unreliable) power in Time Lord's heirarchy, from his ascendency to the Presidency of the High Council, to the hints in the Seventh Doctor's run that he was actaully a contemporary of Omega and Rassilon, make the idea of him actaully losing to the Villian of the Week pretty implausible.
Here, there's no such safety net in place. The Doctor is constantly reiterating the awesome might of Sutekh, and seems genuinely frightened by it, rather than merely annoyed as he usually is. The Doctor gets blasted by one of Sutekh's boobytraps and curses himself for underestimating the would be god. In their sole face-to-face confrontation, the Doctor loses, spilling information about himself and Time Lords to Sutekh, and then being mind controlled not (as is usually the case) because he's playing along to trip Sutekh up, but because for that brief period he is indeed Sutekh's puppet and he can't do anything about it.
For this one serial, there are times when it looks like the Doctor is gonna lose, and that is what makes his eventually triumph all the more satisfying.