All it seems to do is add emphasis to Frodo's need for the Ring, to be honest. He tries to do something to get it back, but other than that it has identical results, including death by tripping instead of the expected intentional violence. Instead of happiness killing Gollum, its mutual greed, but it's still certainly the Ring's corruption that destroys it. It was an unnecessary change, sure, but I don't think it meaningfully changed anything to the extent you're claiming here.
For that matter, Gandalf was still pretty clearly chief-king badass. He's the one responsible for fending off the Balrog, as well as saving everyone's asses at Helm's Deep. The Pelennor was kind of a wash, because of the Army of the Dead (which wasn't a function of Aragorn's badassitude so much as his lineage), and everyone was looking pretty boned at the Black Gate. The Nazgul were portrayed as pretty effective, as I recall (the only difference, I guess, is that Arwen is apparently solely responsible for the river thing instead of Elrond and Gandalf and Glorfindel). Can't really object to the Frodo thing - I didn't really notice it much outside of the first movie when it was appropriate, but YMMV.
Faramir, yeah - I agree that the movies got less effective as adaptations with each iteration (and I'm afraid of this happening with the Hobbit), but I still feel like they did an acceptable job of adapting the work, even by the last movie. And it's certainly far better than anything else I've seen that's tried.