This sounds like an awesome project! I'm a huge fan of the books--the movies, not so much. When they get things right, they're spot on, but when they're wrong, they're way the hell off, not to mention plain awful. My biggest gripe is with Gollum: he is completely mischaracterized in my opinion. The movie oversimplifies him into "good Smeagol, bad Gollum", which while not contradicting the books directly, really misses the point. Gollum does not really have a split personality; he merely argues with his conflicting feelings about how best to get the Ring. In a way it's as if the "two sides" are Gollum and the Ring arguing, the Ring being his temptation to slip back into his old ways, which of course he ultimately succumbs to. There is no "evil persona" that is separate from the rest of him--I really hate the way the movies portrayed that. It reminds me a lot of similar scenes in Spiderman, and that's not a good thing to have to compare it to. I don't know how much can actually be done about it, but if there's any way to reduce the parts where he argues with mirrored evil versions of himself it would probably go a long way towards rectifying this grievance.
Another thing to consider is to try to eliminate Saruman's reference to "the union of the Two Towers" near the beginning. Not only does this go along with what you were saying about making Saruman be out for himself, but I dislike the way it misrepresents the title of the story: what the two towers actually are. In the book the two towers are Isengard and Cirith Ungol, the place where Frodo is captured and imprisoned before Sam rescues him. Since this is shown in the 3rd movie, where it lines up chronologically, while in the books it is at the end of the 2nd, the change I suppose makes some sort of sense, since Cirith Ungol isn't actually seen in the 2nd movie, but I still don't like it. It just . . . sounds dumb. That isn't Christopher Lee's fault, he's brilliant as always, but it just isn't a good line.
My other big gripe about the movies is the way Frodo is made into an ineffective weakling, cowering and wimpering away from the Nazgul and from Gollum instead of bravely facing them, even when gravely injured. Unfortunately, I'm at a loss of how to make that any better. It happens so many times--Weathertop, the Ford, Mount Doom, to name a few--that it's probably unfixable. Alas . . .
At any rate, I'm quite interested in this project. Keep at it!