Well kids, I just got back from the digital screening of this.
This is a superior cut of the film in almost every conceivable way.
The one thing I would have left alone and that I have to disagree with Nick on is the "Concerning Hobbits" segment. Not that I don't think it's wonderfully done, but I find myself preferring the original version. It conveys just as much of what the hobbits are all about as Bilbo's voice-over does but in a much more organic way. And on a purely aesthetic level, the gorgeous reveal of the Hill (and Howard Shore's soaring string arrangement that accompanies it) is altered so that it doesn't have the same impact.
But dear lord everything else that's in this version is pure mithril, and every bit of it is character character character. Boromir's story arc is strengthened, Aragorn's self-doubt is greatly highlighted, the Legolas/Gimli relationship is given much more of a foundation, and the influence Gandalf has on Frodo is shown more so that Frodo's final decision, with Gandalf's "So do all who live to see such times" still echoing in his mind, has an even greater impact.
And the Lothlorien scenes are completely transformed now. I was a fan of them in the original, but this is just absolute magic. A lengthier introduction, more Celeborn, and the gift-giving. What more could a die-hard Tolkien fan ask for?
Add to that references to Thorin, Beren and Luthien, Bilbo's trolls, and Nenya (Galadriel's ring) and you can color me one happy camper.
While I understand Jackson and company's desire to keep things under the three hour limit, I honestly think this is the version that should have been released. Would the film really have made less money if there were fewer showings during the day? You don't make over $300 million dollars simply because being under three hours got you an extra show or two. It sure didn't hurt Titanic any, and this version doesn't have many of the "problems" some critics saw with the released version, which could have translated to even more good word of mouth.
Suffice it to say that, were the new DVD to have this version on it and nothing else, I'd be buying it in a heartbeat. It'd be worth it just to hear Ian McKellen doing the Ring verse in the Black Speech. If you loved the original version, this is a little slice of heaven. If you didn't like the original, this may actually change your mind.