Well, personally, I think some folks are really judging on some sort of bizarre curve. Zardoz is an embarrasing cultural artifact, for example, but it's not some horrid, unwatchable piece of filmwork in the same category as, say, "MetalStorm 3D: The Destruction of Jared Syn", which is still a category higher in production values than, say, a Puppetmaster movie.
Picking a worst film is, of course, a personal choice, and there is no wrong answer. However, I think there are different scales of 'bad'. A film like "Megaforce" was, quite simply, well-produced and throughly terrible: but it was made to appeal to pre-teen males who neither wanted nor cared to be burdened with complicated issues of politics or realistic combat. A film like "Zardoz" may have had a reach that exceeded it's grasp, but it wasn't full on awful in the same way as, say "Cherry 2000"...yet another in a long line of "all alien worlds look like the Nevada desert" movies. And that's not even counting some of the horrible, horrible things that Sci-Fi Channel has produced in it's time.
ANd for the record: Rankin Bass' "The Hobbit" clocks in at a hefty 77 minutes, and is pretty darn faithful, while also being suitable for an all-ages audience. The greatest sin of their version of "Return of the King" was that it was produced in the same way, intending to be a tale for children on broadcast television...it's not that it's bad, it's just a unfaithful, simplified version (and the song "Where there's a whip, there's a way" is a classic, IMHO).
The worst fantasy film? That's a toughie, as there are so many to choose from, but many of them are guilty pleasures. For example, I truly enjoy "Krull" and "The Sword and the Sorceror", even though I freely admit they're pretty campy stuff. If pressed, I'd probably choose "Hawk the Slayer", which is pretty damn bad.