I liked it, and think it's really well done. I like things that tap archetypical forms and the collective unconscious though. I really appreciated the use of the little girl as a much more traditional Everyman figure who is a conduit for the story, and liked that the film was driven by the story rather than by character. Character driven film has become such a standard these days (The Queen, Ray, Monster, etc), and while I really enjoy watching a good performance, there's not a lot of storytelling craft in films of that sort. I loved Pan's Labyrinth because of its structure and how it drew from a mix of fables and subconscious fears. There's something very satisfying about that to me.
The violence is very extreme. The SO occasionally has these movie theatre seizure/blackouts when the tension builds too much in a plot (during Kill Bill he passed out and started speaking in tongues) and this one did it to him. But traditional fables are often extremely violent as well, and while we get a cleaned up Disneyfied version in North America, brutality is actually an important part of storytelling tradition, related to teaching about the dangers of life within the "safe" structure of fiction. This is probably why the majority of the artists I worked with at the children's theatre enjoyed the film so much. We're pushed almost constantly to present sanitized, inoffensive content to young people, while we know that childhood is never like the picture we're pressured to present. Kids are drawn more and more to stories intended for adults because children's entertainment lacks honesty. I'm not saying Pan's Labyrinth is a children's film, but the film makers are saying something with their violence. *SPOILER ALERT* When the stepfather is sewing his mouth shut into the almost cartoonish grin, something is being said to the viewer, it's not done simply for gross-out factor, the shot is steady and it's left to audience members to look away if they must, and consider why they are being show this moment. *END of SPOILER ALERT*
On the other hand, I can easily understand why people might not enjoy this movie. It's very far outside the Hollywood tradition of filmmaking, yet it was marketed in a way that presented it as a flight of fancy on-line with Lord of the Rings, Harry Potter, etc. I've certainly talked to a lot of people who were expecting something very different from the film. Also, while I defend the violence because it was purposeful in the structure, I can't deny that it's extremely brutal, which can be way too much for some people.