Learn Spanish (Latin America): Fue terrible que la acústica fallara. - It was terrible that the acoustics failed.

The phrase Fue terrible que expresses a judgment or emotion in the past. Just like present-tense judgments trigger the present subjunctive, past-tense judgments require the past (imperfect) subjunctive for the action being judged.

Could I use the imperfect Era terrible instead of the preterite Fue terrible?

Yes, and both would still trigger the imperfect subjunctive. Using Fue terrible treats the terrible situation as a completed event (like a single concert that just ended). Era terrible would describe an ongoing situation or the general background feeling in the past.

Why is la acústica singular if the English translation says acoustics (plural)?

When referring to the sound properties of a room or venue, Spanish treats la acústica as a singular, abstract concept. English often uses the plural form for this, but Spanish keeps it singular.

What is the infinitive of fallara, and could I use the -se ending instead?

The infinitive is fallar (to fail). You absolutely could say fallase, as both endings mean the exact same thing. However, in Latin America, the -ra ending is used almost exclusively in spoken Spanish.