I felt that the LoTR movie was seriously flawed. In many ways, it is indeed rather impressive. However, there are also some major problems with it.
Firstly, New Zealand. That's a major problem. It's a beautiful place, and very appropriate for parts of the movie, but... well, am I the only one who laughs when Gandalf says "We're going to reach the mountains in a few days", even as he walks down a steep slope? Some parts of the movie should have clearly been filmed elsewhere.
Second, the Orcs. This is mostly a matter of personal opinion, but I think going with sludgy, slippery orcs was a major mistake. We can ignore the fact that the orcs are described very well in the book and certainly do not look like that - it's a movie maker's priviledge to change such aspects. But I think it's going to make parts of the second and third movie look bad (assuming, of course, that those parts are still there in the first place). For example, I can't see how Frodo and Sam could be mistaken for Orcs in Mordor, no matter how dark it is.
Third, the structure of the film/trilogy. They screwed up by making three films instead of six (notice that the 'trilogy' does in fact consist of six books). This would have cost a lot more, of course, but when you make a film that's guaranteed to bring in money no matter how awful it gets, you can afford certain risks. And, dividing the film into six parts instead of three would have resulted in much more freedom when it comes to deciding what goes in and what doesn't. I mean, it's one thing to cut out the Old Forest & Bombadil, but to cut straight from the Brandywine to the gates of Bree was too big a jump - they should have at least done a sort of interlude showing that something did happen between those two points. And such problems continue to plague the movie. It's just paced wrong. Things keep happening when the viewer should be getting a break from the action, and the viewer gets a break from the action when things should be happening. I've read the books too many times anyway, but I wonder how someone who never read them would react. I suspect that such a viewer would be mildly confused - at the least.
Fourth, Saruman. WTF? There's a damned good reason why the book made no mention of Gandalf from the moment he left Shire until they arrived in Rivendell. Tolkien was introducing the reader to a whole new world, and he did so carefully, trying not to introduce too many places and characters at once. That's why Gandalf's trip to the south is kept as nebulous as possible in the book. But the film wastes precious minutes showing what happened (not to mention needlessly embellishing it with a rather unimpressive action scene at Orthanc). Why?
So yeah, it's a nice movie, and it could have been done worse, certainly, but it could have also been done better. A lot better. The unfortunate thing is that because it's based on such a well-known and well-liked book, it's almost immune to criticism.