I think the spectacle of a lot of the CG in TTT and ROTK served the film greatly, and really helped make the trilogy as epic and grandiose as it is. On the other hand, I also love how FOTR doesn't feel quite as big as the others. We really hone in on Frodo's perspective, and his view of the world is very limited. We discover it as he does. Further into TTT, the cat starts to come out of the bag and the world opens up. 10,000 orcs attack Helms Deep. Giant talking trees flood Isengard. This is big stuff, and the CG was needed. Well, maybe not the silly Legolas acrobatics, but a lot of it.

LOTR may have been done at the perfect point, when PJ had enough technology to do it, but not so much that he could go over board with it like in his following films.

It's interesting to hear an honest take on how Viggo felt about it during production. I think he loved the project and was excited to be a part of it, as is evidenced in the DVD appendices, but I can imagine the concerns he and others may have had. Whenever I've seen a cast member asked in an interview, "Did you always know it was going to be something special?" it's always seemed like they really want to say yes, but they know deep down that they had no idea.