The firm film, in the extended version, was quite good. I don't think it suffered from the lack of Bombadil - he was a walk-on from Tolkien's other writings anyhow, and the bit of Arwen thrown in didn't really hurt anything. The standoff with the Balrog in the extended version was just the sort of eye-candy I was looking for in a LOTR movie.
Jackson's increasing arrogance in the later films was tragic, really. There was plenty in the source material to make for good eye-candy without adding skateboarding elves and the like. What annoyed me the most was that half of Gollum's character got lost in the visual gimmickry - the half that knew the destruction of the Ring meant his own destruction, and sought that release. The (first) ending is just awkward if interpreted as "oops, I slipped and fell into a volcano" instead of Gollum finally uniting his desire to have the ring with his desire to see the ring destroyed.
Well, it remains to be seen whether Jackon can best the Rankin-Bass The Hobbit. ;) I can only hope that, given he's doing two movies, he'll add all his own BS to the second. There's much less room in that story for cutting.