John Lackland, son of Henry II and future king of England after the events of Ivanhoe, is a real historical figure. Like his brother, King Richard I, John has left a huge impression on British cultural memory. Unlike King Richard I, his reputation is not for bravery, strength, and chivalry. What John generally represents is weakness, cowardliness, and greed.
You have to be a pretty crummy king to leave a bad taste in people's mouths over 800 years after your death. One reason for Prince John's enduringly bad popular image is thanks to books like Ivanhoe, which use him as a convenient villain. After all, Prince John did rebel against both his brother and father – so he had to be a rat, right? There was a lot of civil unrest in England during his reign – so he must have been a weak ruler. He's a prime choice if you need a weaselly medieval villain for your book.
Ivanhoe's John doesn't actually appear that much in the book – he's mainly there because the novel needs political instability to make its adventure plot work. The threat of Prince John's revolt against his brother is what forces Ivanhoe to travel early on to York, even though he's wounded, which leads to Rebecca's kidnapping, and the rest is (literally) history.
There just isn't much sympathy in the novel for Prince John. Scott doesn't give him the same kind of character development he gives King Richard. Because we spend so much time with "the Black Knight," we get to know Scott's vision of the guy behind the historical Richard. Prince John, however, is always "Prince John, Villain." We know from the first chapter that it's his fault the Norman lords are getting cocky and bullying the Saxons.
We do get some analysis of Prince John's character from Scott, though. Even if Scott doesn't seem to like the man, he does try to think through what makes him tick. According to Scott, Prince John's problem is a mix of arrogance and bad luck. For example, when the time comes for Ivanhoe to choose the tournament's Queen of Beauty and Love, John suggests Waldemar Fitzurse's daughter, the Lady Alicia. John wants to show his counselor some respect by drawing everyone's attention to his daughter. But by making it even more obvious and public that Ivanhoe is ignoring Lady Alicia in favor of Rowena, Prince John only makes Fitzurse angrier and more embarrassed. That's his bad luck.
Prince John also alienates people by being his own not-so-sweet self. When they hear that his brother is back in England, all of Prince John's supporters start to desert him, because no one has any personal loyalty or feeling for him. They've joined him only because it was convenient or profitable to do so. As soon as things begin to look bleak for John, all of his "supporters" ditch him. The narrator emphasizes that "[f]ew of [Prince John's followers] were attached to him from inclination, and none from personal regard" (15.1). Of course, Prince John's unpopularity is his own fault, since he's a greedy and horrible person. But still, we feel kind of bad for the guy – it can't be fun standing in Richard's shadow.
When Prince John finally appears to his brother after the plot has been exposed and put down, Richard decides not to execute or even imprison his rebellious sibling. He just sends little brother to stay with their mother. Considering what a tough lady their mother, Eleanor of Aquitaine, was, that might have been punishment enough.