Different strokes for different folks honestly. The book, and the movie where great for two different reasons, one was the book itself can be considered very dry, and dragging in places, this has been mentioned countless times in connection with it, Tolkien tend to ramble on a bit, and while that worked well in a long book, in a movie where everything is show yeah it would be utterly boring, and the pace would be shot to hell. That's not to say the book isn't as good as the movie because it is just different, the book is a sweeping epic and has the space to go into these tiny details in quite a great deal of depth.
Now then the movie was excellent, and the cutting of Tom Bomdebil, and the Barrow Wight scene was in did nessacary because in a movie that would be very dull, and come across as stupid, now then Peter was contructionly obligated to cut the movie down to three hours he had no choice, but he also knew he could fix this with the DVD release, so it didn't bother him as much, he choose to focus on the more entertianing aspect, and in fact make it more fun for the common movie going public while still making it fun for the Hardcore Tolkien Fans. He shortened what was nessacary to make it appealing, but he kept things that greatly appealed to fans of the book. Hell that's why he had Gandalf be in the trailers because we the book fans knew he would be back, and wanted to show us what he looked like I'm thinking.
Now then these are two different mediums, you can't translate the book prefectly because it'd be boring.
Now then timeline question I think that time did pass but no more then Five years top. The reason Pippin, and Merry where portrayed that way was to show their growth over the course of the Trilogy, one of the more resounding themes about the book, and movie where the growth of people over time, Frodo from innocent, Aragorn from Mere Ranger to King, Sam from Loyal gardener to a noble soul in himself, and the growth of Mankind as a people.
Peter Jackson is trying to show that through pictures, pictures can't show inner thoughts, so he had to show the growth visually.
And I think he did an amazing job.