This is just too cool. I'm all giddy about Lord of the Rings now, for the first time in my life (I haven't read the books). Like a gazilion other people, I watched the films in the theatre without any real excitement. While I enjoyed them quite a bit, they didn't elicit any real joy from me, nor did they make me care all that much about any of the characters. I have the EE's (AND the theatrical versions!) on DVD, but I haven't even watched them. That's how little I care.
And then I watched this. Suddenly, everything worked.
Every great story needs a good beginning to make us CARE (in one way or another). Starting with an incredibly serious historical prologue, complete with battle scenes and the whole lot, is not a good way of doing this. The ring verse instead gently reminds us that this is a serious fantasy story, but with poetry and ominousness - and brevity! - instead of pomp and blood. (The appendix is also a cool way of introducing us to Gollum.) But the real beginnning takes us to straight to the hobbits making us actually care about Bilbo and Frodo and the hobbits the way Tolkien intended. Cutting Bilbo panicking about the ring, adds immeasurably to this. There's a party, but you sense something is afoot. Gandalf's arrival was also wonderful in the theatrical version, and I understand why you stick by it (even though I don't know the EE version), I can't see how it could be improved. I love the lush greens, the fireworks, him meeting Frodo - the whole bit. (I didn't notice any continuity error.)
As for the journey, I think your cuts work. I was a bit apprehensive reading your cutlist and scared that you would have cut too much tension-building. But the ferry scene was at least as exciting and scary this time, so no problem there.
The ending is also very nice. I don't mind Arwen's antics in the original, but I see where you're going with this. I'm somewhat uncertain that it's a good idea to let someone apart from Arwen summon the flood, though. It's obvious with the horse-shapes that SOMEONE summoned it, but PJ changed that for a reason. It shows that the elves (represented by Arwen) are in control, as opposed to SOMEONE is in control (and could it be the elves?). Mystery is all fine and dandy, but it shouldn't go too far, especially when we won't find out until the next instalment (if ever).
The very end is great. If I didn't know the story, I would actually be worried for Frodo's life. You could think at this point that Frodo was simply a macguffin to introduce us to the elves and Gandalf and the REAL story. It's a great place to end the story (I didn't mind the "grace" line, though), and it avoids the TOO MUCH problem that plagued the theatrical editions. It's a lot of story to take in three hours, that's probably why there's an EE. Now it's an incredibly exciting pilot for a TV series, and I can't wait to see parts 2, 3, 4, 5 and 6.