Hmm, interesting theories,
Sauce, though I disagree on most of your points.
Unless I'm badly mistaken, Tolkien's Shire wasn't much like the average world of the average Englander in the 1930's-50's, at least setting-wise. Anyway, I don't think audiences are really intended to identify with setting as such, but with characters -- their emotions, wants, desires, problems. For instance, in the sequence, Bilbo contemplates leaving his home, friends, and family behind. That's easy to identify with. In
Star Wars, Luke lives on an alien desert planet and deals with robots and Jawas and such -- but I don't think we have any trouble identifying with him or his desire to bust out of his limited life and have some adventure.
I do agree, however, about Jackson's take on Men and his elevation of what he saw as a theme there -- so much so that I think a weird shift starts to happen somewhere in TTT and Aragorn becomes foregrounded as a character who is at least as important as Frodo through the rest of the trilogy. Maybe later on down the line we will get into whether or not this was a good and/or justified choice.
Boro, thanks for clearing that up. I haven't seen the movie in a while, so I can't speak to it directly, except to say that a lot of lesser Shakespearean actors get into this mannered Shakespearean delivery, which to me always has a sort of subtext that they're uncomfortable with the language. I liked Holme because his delivery was very natural, and also I think that the character of Polonius is a long-winded motormouth -- for example, his praise of brevity in his humorously long-winded speech in II.2 -- and so a sort of chatty delivery is a justifiable interpretation. Like I said I haven't seen it in a while, but he made me laugh at the time and I thought it was a memorable performance.