I saw the LOTR III a couple of days ago. I thought it was okay, but a bit over long at 3 plus hrs.
As for the "fantasy" locations - I saw a park just down the road from my house and the slopes of Mt Doom in Mordor were easily recognizable as a volcano in a national park which I've been hiking in many times. The country side around Hobbiton was also very familiar. Doubtless much of the international audience will think most of the locations were completely computer generated or all sets in a studio back lot, but they'd be wrong... the makers must have saved a lot of money using loads of real places - the cheapskates!