1. Christopher Lee is great, and the character is there in history, so if they can use him, as long as they use him well.
2. That elf chick: I understand why they created her -- along the lines of replacing Glorfindel with an expanded role for Arwen. Something for the younger fan-boys and the fan-girls, too. That said, befriending a dwarf is a little much and falling for one is crazy stuff. Plus, it cheapens the eventual friendship between Legolas and Gimli.
3. Legolas. He's really not out of place there. He's from Mirkwood, and is the son of the King. Granted, Orlando Bloom is not Christopher Lee, and he has a much bigger role than needed.
4 and 5, I grant you will suck. Especially if the battle using hand-held "shaky" cams. One of the reasons I prefer Fellowship to Return of the King (other than the six endings) is the shaky-cam battle where my eyes never had a chance to focus on anything.
BTTT.