The Phial didn't bother me, but the whole cloak dissapearing thing didn't make sense at all in the film. They didn't (if I remember correctly) explain at all what the cloak did. So if you were not at all famillar with the books, you would have been completely lost.
I too also thought that Edoras should have been grander, Gondor should have been bigger, the Plennor Fields should have been larger, the Grey Havens were not right, and... oh... I could go on and on for hours
