I think he is one of the greatest guitarists ever. Maybe not the No.1 technically skilled player in history (there are guys who can shred faster and other who can play crazier runs eg Rusty Cooley and Michael Angelo Battio), but he certainly comes in as the most innovative and creative guitarists in history. His great songs are without equal but he does throw aout a fair bit of dross to fill up albums. Some of these tracks are oozing with pretensious phrasing but they still display amazing ability.
As a musician I would see him more as a composer than a guitarist. He just happens to be a guitarist who can actually play to perfection exactly what he has in his mind... that to me is what being a virtuoso is all about.
As far as his knowledge of music goes, I would say it is all encompassing and in years to come he could be viewed as one of the great off-mainstream composers of this time as Paganini is today. For those shred and neo-classical only guitarists out there, I heard Vai playing Paganini's Caprice live, it was a LOT faster and more emotive than Jason Becker's version, and that's saying something!