On the down side, tpau and learnedax (who have read the book recently) assure me that the movie takes major liberties with the story. Lots of stuff is rearranged, or even changed outright.
On the up side, I just don't care -- IMO, as a movie, it kicks serious butt, and that's really all I ask of an adaptation. The pacing is a delight, starting a tad quietly but getting relentlessly tenser up through the climax. The script nicely intercuts all three stories, which is certainly different from the way the book runs, but does a good job of juxtaposition. It has just enough humor to keep things from getting unpleasantly grim. (And yes, the special effects are every bit as remarkable as they are billed -- Gollum is the first synthespian I've ever seen that just plain works.)
And the movie demonstrates, beyond a shadow of a doubt, that Gandalf is a thousand times cooler than Yoda.
That latter is actually a serious point, in a sense: the film throws into sharp relief just how bad most fantasy & SF films these days are. I mean, yes -- we knew that Star Wars had gotten bad. But it's just plain pitiful compared to this. I'd forgotten how good epic storytelling feels when it's done right: literally inspiring, getting under your skin.
Definitely the most fun I've had at a movie in a long time. See it.