Using a rotoscope technique that saw animation drawn on top of live action acting, its certainly unlike anything I've really seen before. Although rotoscoping has been used elsewhere, here the animation erratically changes from fully animated characters, to actual actors simply colourised and stuck on painted backgrounds. Combined with trying to fit in however many thousands of words into one 2 hour film (Bakshi had filmed the first 2 books separate, but they were squidged together instead, and The Return of the King was never filmed - leaving the ending somewhat abrupt and unsastisfying), it makes for a rather incomprehensible mess.
Sometimes the rotoscoping technique does work, especially with the enemies, as the real-life movement gives them a creepy presence that fits their character, though the low-budget costumes and masks used sometimes detracts from this. However, other times it just looks ridiculous, as if a bunch of battle re-enactors got dressed up together for a party, only to then have their eyebrows and beards animated on their faces! It also makes for a rather trippy experience, as backgrounds change continously, with all kinds of twisted colours and lights.
With the combining of plots and leaving out of key scenes show in Jackson's films, the whole film either loses its epic quality at best or makes little sense at its worst. Scenes jump willy-nilly, seemingly important characters drop out or appear at a whim and not much is made of the real nature of the quest - to destroy the ring.
Of course, I'm only basing my assessment on Jackson's films, but the characters rarely match up their more recent counterparts. Gandalf is angry, strange and more 'away with the fairies' then McKellen's Gandalf - who's kinder and more concerned with the welfare of the Hobbits, while this Gandalf more resembles a spaced-out tramp. Sam manages to be even more irritating (but just as homoerotic) and Gollum acts more like Skeleton from SuperTed.
What we're left with is a film that varies between being laughable, boring and downright bewildering. There are indeed flashes of ingenuity, but most of the time its hard not to laugh at just how amateurish the whole endeavour feels. Its perhaps worth watching if you're a fan of PJ's far superior editions just as a bizarre curio, but simply nothing more.

IMBD Page: The Lord of the Rings (1978)