It's not good. Toward the end, apparently when they were running out of money or time, the plot is jagged and nonsensical. Without knowing the books or Jackson movies, the viewer is left to wonder what the hell is happening. The first book, The Fellowship, is represented pretty well, but when they tried to cram in as much of The Two Towers as they could, it dissolves.
However, the animation is really, really interesting, and I think it deserves to be watched for that.