Quite often in film, the portrayal of the villain can make or break a movie. This is true most often in Hollywood blockbusters. For example, in Star Wars' original trilogy, Darth Vader forms a properly menacing villain until the Emperor comes on the scene. The true villain of the piece, Palpatine, isn't revealed until the third movie, except in a tiny holo-figure. The suspense and wonder about his character helps the characterization of the man. Even in the new trilogy, his hidden identity remains a secret until the third film.
Another cheesy blockbuster is Independence Day. The mother ship spawning the other ships isn't even seen until the last thirty minutes of the movie.
Of course, the ultimate example is Jaws. By happy accident, you don't see the shark until the end.
The point? Villains are much more frightening when hidden, whether behind a black mask, or deep water.
So, we come to LOTR. In FOTR, Sauron is characterized much like the book. He is only seen in flashes of the shadow-world, as the Eye. This worked for me. However, when it came to TTT and ROTK, I was utterly disgusted by the portrayal of Sauron. Where in the book does it say Sauron was literally an eye tethered to the top of his tower? Peter Jackson made horror films, for heaven's sake. I would think he'd know better than to reveal the villain in such a pathetic way.
The physical descriptions of Sauron and his tower in the book are much creepier, to me. He was unable to take physical form, and brooded in a chamber of his tower, creating magic. Every time one of the hobbits looks at the tower, it is shrouded in darkness, of Sauron's making. No lighthouse-ish eyes here. And the occasions when he almost catches Frodo would be creepier without the light, too. Imagine the scene from the movie, except Sam can't see what is going on, only Frodo. Much more scary, IMHO.
Sauron's demise, even, stunk. A big panicky eye jerking around and exploding. The tower exploding might have been cool, but Sauron was once a Maia. Please, respect that enough to not ridicule him. (Not that PJ shows much respect to other maiar)
Imagine this, instead, with the special effects:
I think PJ missed a really big opportunity, to have one of the creepiest, scariest villains of all time. Instead, he got a giant eyeball. Woopty-doo.
Quote: And as the Captains gazed south to the Land of Mordor, it seemed to them that, black against the pall of cloud, there rose a huge shape of shadow, impenetrable, lightning-crowned, filling all the sky. Enourmous it reared above the world, and stretched out towards them a vast threatening hand, terrible but impotent: for even as it leaned over them, a great wind took it, and it was all blown away, and passed; and then a hush fell.