As a huge LOTR fan who was actually really annoyed with some of the things they did in the Jackson movies (many of which reek of studio-suit interference), I still think it's obviously better than the Bakshi version and the Bakshi version was the one that I was into when I was a kid. The Jackson LOTR movies may have the greatest use of music in film of all time, and the way they used the landscape cinematography to create a world on the screen, on their own, make it a triumph of filmmaking.
All the rest of it - the acting, script, pacing, effects - had to do was not totally screw it up to a point where you couldn't enjoy the music and scenery. And they don't screw it up. There are some stumbles here and there, but the writing is mostly fine and the performances mostly good. Could it have been easily improved? Absolutely. Could it be re-done better today even with a similar budget? I think the chances of that happening are basically nil.
... Also, the extended cuts are generally better. The pacing of the first film is just massively improved by the extra time spent in the first half especially, and the questionable stuff in the second film is diluted. I'm less convinced that the ROTK extended version is really much better but it it isn't worse.
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