I'm probably breaking Cardinal Rule #1 for reviewers or something here, but I'm going to start with the summary: very good, perhaps even great, but not perfect. Nothing's perfect, of course, so that's OK. If ever a book or series deserved a perfect screen adaptation, it was this one. On the other hand, it's quite possible that no book of equal stature or popularity has ever been so fiendishly difficult to adapt to the screen. The Lord of the Rings (LotR from now on) is written on such a grand scale, and at the same time with such attention to minute detail, that "errors" in translation to screen form are inevitable. There are nits to be picked. The real question, though, is whether the movie stays true to the spirit of the books. Does it present the first-time movie viewer with the same basic experience that a first-time reader of the book would get, within the limitations of being a different medium? Despite everything I'm about to say, I'd say the answer to these questions is a resounding yes. The movie is, in the end, as captivating as the book was when I was a child.
I'm not sure if I believe there can be such a thing as a "spoiler" in the context of a movie based on such a well-known literary work, but I will be (eventually) talking in some detail about things that are unique to the movie version. The next section will contain minor spoilers about acting, scenery, and such. The third section will be the most dangerous in terms of giving everything away, as I discuss differences in plot between the book and the movie. You have been warned, and it's up to you to stop reading when you get to a point that exceeds your comfort level.
The movie is gorgeously presented. The scenery, the buildings, the costumes...all have obviously been chosen and/or constructed with great care. The Shire looks like I expected the Shire to look. Hobbits look pretty much like I expected hobbits to look. Weathertop doesn't look quite like I expected it to look, but Peter Jackson's vision of how it should look might well be truer than my own. Ditto for Rivendell. No problems there. New Zealand was the perfect place to film this movie, because it embodies in a small space all the different kinds of terrain that are needed. The use of computer graphics to fill in where even the terrain does not suffice is flawless. Not once did I find myself distracted from the story by wondering - or knowing - that some piece or other of what I was seeing was not "real" but computer-generated.
While the settings were well-nigh perfect, there is room to find fault with the portrayals of people. I'll get to acting later and deal just with the visuals for now. The orcs seemed a little too grotesque. On the other end of the spectrum, the elves seemed wrong. The ears were just a little too pointy, the hair just a little too long and consistently blond for me. Maybe these visual cues are necessary, to distinguish elves from humans clearly, but I felt they were overdone. Elrond in particular bugged me. I don't mean to knock Hugo Weaving's acting of the part, which was fine, but he lacked a certain gravitas necessary to the role - a deeper voice, perhaps, or a gruffer, more muscular appearance, were called for. The Elrond of the books was, after all, half elven, and the Elrond of the movie seems all elf. It was hard to imagine this Elrond having the authority and strength to bring these people of varying races and factions to the council table, or to be the force behind Rivendell as one of this world's strongest bulwarks against the evil might of Sauron.
This brings us to the acting. Overall, the actors do an excellent job. The hobbits are perhaps given a little too much of a child-like portrayal, and Pippin's accent might be a little overdone, but that's all OK and good for relief from the relentless seriousness of the plot. Ian McKellen is a truly excellent Gandalf. If I were giving out Oscars for Best Supporting Actor he'd be an easy pick...if it weren't for Viggo Mortensen as Aragorn. While Gandalf has become the standard wizard on which so many others have been based, and it's OK to play him as those others have been played, Aragorn is a more ambiguous character. I've always thought it would be an extremely difficult role, but Mortensen meets the challenge. His use of voice, expression and body language to convey Aragorn's combination of rough woodsman and high-born noble is nothing short of amazing.
Possibly the only disappointments in the acting department are Sean Bean as Boromir and Cate Blanchett as Galadriel. No, I'm not going to complain about Liv Tyler's Arwen. What's wrong with that character is the director's or script writer's fault, and has been discussed at sufficient length elsewhere; Tyler does a thoroughly acceptable job with the role she's given. Bean's Boromir, however, lacks the chest-thumping manliness of the book's version, alternating instead between a flat sullenness and acting-school angst in his "what have I done" moment at Amon Hen. Blanchett's Galadriel is simply too much of a "Lady of the Lake" stereotype more suited to Arthurian legend than Tolkien. Partly it's not her fault, though. Her role and lines are significantly truncated and changed from what's in the book, and the cheap effects - especially during the sequence where she's tempted to take the ring - can't have helped either. All of these things surely made her job much more difficult than it really needed to be, but nonetheless I felt that an actress of her talents should have been able to make more of the situation.
Neither Bean nor Blanchett were truly awful, though, and neither is a truly major character anyway (neither will be seen any more), so these two sub-par performances really don't hurt the movie in any significant way. The other actors' performances, ranging from solid to stellar, more than make up for any lapses.
The movie mostly stays very true to the plot of the book. The sequence from Hobbiton to Bree to Weathertop to Rivendell to Caradhras to Moria to Lorien to Parth Galen is preserved. The omission of Old Man Willow, Tom Bombadil, and the Barrow Downs was probably a good idea and mostly well done; I found the "teleportation" from Buckland to Bree a little jarring, but I doubt that would pose a problem for most people. The manner in which Frodo's identity was revealed in Bree, and the manner in which he came to use the Ring, were not quite true to the book but worked well enough. The direct treatment of Gandalf's trouble at Isengard actually worked better than having him tell the story to Elrond's council as in the book; abbreviating most of that council was also an improvement over the book. As I said before, the replacement of Glorfindel with Arwen at the Fords of Rivendell has been much discussed elsewhere, so I'll limit myself to one comment: this scene is important in the development of Frodo's character, as one of the places where he first shows open defiance rather than fear of the Dark Lord's minions, and for that reason alone I regret the change. Neither Glorfindel nor Arwen is important enough in either the book or the movie to care otherwise.
The first two plot quibbles have to do with Gollum and Saruman. Both are introduced prematurely, relative to where they appear in the book. In the volume corresponding to the movie, Gollum appears only as a barely-audible set of extra footsteps in Moria, and as a possibly-illusory pair of eyes on a log between Lorien and Parth Galen. In the movie, his presence is explicit and remarked upon in the first case, and inexplicably omitted in the second. This really doesn't affect the plot much, and I can completely understand the filmmakers' desire to "bring forward" such an interesting character, but the purist in me still objects slightly. The portrayal of Saruman is slightly more problematic. In the book, he's a slightly ambiguous character, corrupted by Sauron but subtly so and to an uncertain degree. In the movie, he's portrayed as a thoroughly black-souled character, openly allied with Sauron and not the least bit subtle about anything. Worse, his ability in the movie to control weather at Caradhras and thus affect the progress of the Fellowship is beyond anything hinted at in the book. This is troubling because uncertainty about the depth or nature of Saruman's betrayal is a critical part of Gandalf's and Aragorn's decision-making, and portraying Saruman as such a pure and obvious bad guy puts those decisions in a very different light.
My last plot quibble is that everything to do with Moria in the movie is wrong. For example, in the book:
To be fair, some of these changes are justifiable. The fight with the Watcher is quite good, as is the "Indiana Jones" scene on the stairway - complete with humorous commentary from (of all people) Gimli. The brooding, lurking danger of the book's Moria might not be as appealing or as easy to portray on film as the more visible and immediate danger of the movie's interpretation. The changes don't even affect the plot much, really, but they do change the world in which the story occurs; the movie's Moria strikes me as a very different place than the book's Moria was, and in my opinion a much less interesting one.
I've spent more time, particularly in the last section, describing what's "wrong" with the movie rather than what's "right" with it. That's a shame, because there really is a lot that's good about the movie. For the most part, it's easy to forget you're watching a movie, and to believe for the moment that you're actually living in Middle Earth, but it's very hard to describe the tiny things - visual touches, sounds, gestures - that contribute to such immersion. Seamlessness is a good thing in a movie, but doesn't leave much to comment on; this film's few flaws are notable because they are exceptions. Despite a few instances of uninspired acting, a few places where special effects are overused or plot elements were tweaked a little overzealously, the movie overall does a truly excellent job of bringing Tolkien's original grand vision to the big screen. That's no small feat. In fact it's an amazing feat. Peter Jackson and his team have done extremely well at a difficult task, and deserve congratulations for exceeding even this demanding fan's expectations.