In addition to the fact that olive oil isn’t great for frying (high temperatures lead to it being broken down into more harmful substances, as many others here have mentioned), the bigger reason is the quantity of oil you would be ingesting.
One of the major reasons for any dietary style being healthy is the relatively low calorie density of healthful foods. Another is variety in the diet. The Mediterranean diet is believed to be good for you because it covers both of the former (in addition to being low in saturated fats and red meat). Olive oil is part of the diet, but is still not consumed by the bucket load. If it was, it would up the calorie content of any meal immensely. Additionally, olive oil is an accompanyment, a condiment to the remainder of the (mostly plant based) food.
So why is olive oil fried chicken worse for you? First, the carcinogens and trans fats and all that. Second, by nature of frying, oil attempts to replace all the water in anything you’re cooking – the chicken actively absorbs oil, ensuring the relatively low calorie density of chicken skyrockets. Pretty much all the calories you should be getting from a meal are thereby coming from one or two pieces of chicken, instead of being derived from a whole variety of fruits, veg and healthy carbohydrates which pack a whole lot more nutritional value (in terms of vitamins, minerals, phytochemicals, fiber, etc.) than olive oil could ever pretend to contain.
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