I didn't have a problem with Manhattan's dong. The only reason it was distracting compared to the book is because in the book, it's just an outline to suggest "Hey, it's there." In the movie, it has to, by necessity, be more realistic. Plus, most viewers aren't used to seeing so much penis in a movie. It was fine for me.

The sex scene was too long, though. And too slow-motioney.

And at first in the Rorschach/kidnapper scene, I thought "aw, that sucks, I liked the book a lot better." Then he repeatedly cleaved him in the head ... I thought it worked well and had a similar effect. I like both, but not one more than the other, to be honest.