While the phrase "Amateur Night in Dixie" was certainly used during and after World War II to indicate a screw up or to use the correct acronym SNAFU (you supply the translation), I remember my parents using the phrase and telling me the origin was centered around Amateur Nights in local movie houses during the Depression and one of the most popular national radio shows, “The Original Amateur Hour". It was as big as "American Idol" is today and had some of the most outlandish performers.
The Depression as we all know was a desperate time; nobody had any money and when money and prizes were up for grabs every Saturday night at the local Bijou, and almost always broadcast by the local radio station, a lot of Americans were willing to do almost anything for fame and fortune. Theater groups and high school drama departments were very much part of the mix, thereby contributing to this phrase since if there was no money for gas often times across the Midwest down to California, why would you think there would be any spare cash for a new back drop to placate the local Corky St. Clair -- Christopher Guest's character in 'Waiting for Guffman"., down South in Dixie?
The South was the poorest section of the US for sure. Yet, some of America's most sophisticated song writers and performers, Johnny Mercer and Hoagy Carmichael to name two of the biggest, hailed from south of the Mason Dixon line. So, while it may have been unfair to characterize the whole region as the worst, that's what happened. The Grand Old Opry was just starting, and although its national radio audience was as big as any program from New York City or Hollywood, it was obvious the stars were right off the farms and down from the hills and not living on Park Ave or Beverly Hills.