It's certainly an impressive movie (although I'm getting less and less impressed with "impressive movies" since wowing an audience seems to be so easily done these days).
I had a few major problems with it, though: not just a negative "gut feeling"-type reaction, but more serious philosophical reservations about what Del Toro does (and fails to do) in the movie.
My big issue: the way the movie portrays the Fascist Captain. Del Toro isn't content to just make him a bad guy - he has to be a Truly Eeeevil Man, and, in virtually every shot that he appears in, Del Toro hits us over the head with his nastiness. And he doesn't do this with any sense of irony, let alone humor, like in The Stepfather, for example. No - the Captain is a Fascist, which seems to mean that he is subhuman, undeserving of even the most fleeting or shallow sympathetic characteristic.
This wouldn't be so bad - just a little bit lazy and cheaply melodramatic - except that Del Toro decides to add realistic, graphic violence to this humorless cartooning (most egregiously in a series of torture scenes).
I'm not a big fan of this kind of triple threat: (1) a completely Evil Bad Guy with no redeeming features, (2) a filmmaker who keeps reiterating this evilness through the least sophisticated means possible, and (3) realistic, graphic violence of the post-Saving Private Ryan variety.
Del Toro wants us to hate this character so much that we're supposed to cheer when he's finally killed and think that it's fitting that his killers refuse to honor his final request.
Some of my friends, who liked the movie a lot, defended Del Toro's handling of the Captain by arguing that the story is being told from the perspective of a little girl, who sees him as a kind of fairytale monster. I get this: Del Toro has made a movie that mixes fantasy and reality where the "real" scenes have a simplified - almost black and white - view of the world, while the fantasy scenes have more nuance and ambiguity.
I still have a big problem with this explanation: it only works if, deep down, you actually agree with the little girl's simplification - i.e. that the fascist Captain is, ultimately, sub humanly evil and the Communist partisans he is fighting are super humanly good. And, honestly, I think this is what Del Toro believes: his own view of the world seems to be as simplistic as that of his heroine's.
Let's politically recast the movie for a second, just to see how well the "from a little girl's point-of-view" reading holds up:
Imagine exactly the same movie, except set it in the aftermath of the American Civil War. The sub humanly evil Captain is a radical, Republican reconstructionist, and the super humanly good guerrillas are D.W. Griffith's romanticized Clansmen. If you would still be willing to give that movie a pass, then I guess I won't begrudge the "fairytale" defense of Del Toro's handling of the Captain.
But things are much more ambiguous. People who hold horrible political beliefs don't always act like monsters - they certainly don't act like monsters all of the time. Amon Goeth, the Nazi villain in Schindler's List, is certainly a monster, but Spielberg, unlike Del Toro, doesn't beat us over the head with how evil this character is. Spielberg's technique is much more nuanced, even if the two characters are both the definitive villains of their movies.
The Night of the Shooting Stars has an example of this kind of thing done just about perfectly: the father and son killers, who spend the movie stalking the refugees, are given one of the most wrenching and emotionally complicated death scenes in the history of movies. As evil as we perceive these characters to be, the Taviani Brothers do not let us celebrate, in any way, their deaths, but rather force us to see it as just another aspect of the obscenity of war.
It's this central failing that makes the rest of Pan's Labyrinth fall apart for me. As beautiful and magical as some of the fantasy sequences are, they don't redeem Del Toro's simplistic and brutal take on reality.
And it's because of this reaction that the movie's smaller flaws - flaws that I'd usually be willing to overlook - stick out at me. Like, why exactly do the guerrillas use a key on the lock, when that will give away the fact that they have a spy in the Captain's house? Or, why does the little girl eat the food in the banquet hall when she's been explicitly instructed (at least twice!) not to? And why does the Fawn tell her that since she ate the food she has completely failed in her quest, only to later tell her, no, wait, she still has another chance, even though she doesn't do anything in the interim to redeem herself?
This is nit-picking, but each of these problems is indicative of the essential arbitrariness of what Del Toro is up to: why do these things happen? Well, they have to happen, so he can get move his plot along and/or get his point across. (By the way, his point seems to be: Fascists are evil).
Reading back on this, I realize I've been a lot more combative here than I really like to be. After all, it's only a movie and I'm not going to lose any sleep over people liking it. (And if you're a fan of the movie, please feel free to post any kind of rebuttal/defense you'd like). But this is one of the few movies I saw this year that really pushed my buttons (in a bad way), and I'm surprised that the response to it has been so overwhelmingly positive.
Really though, my main point here isn't to make an argument against the film, but rather to dig into why it doesn't mesh with my sensibilities. I keep coming back to the feeling that the movie is just too obvious and deliberate - in terms of its relentless one note characterization of the Captain, its black and white reduction of the political situation, its steamrollering over inconsistencies in the service of the plot. I didn't feel like Del Toro made any room for the audience.
I like to think about this in terms of two kinds of surprises. We have surprises in movies themselves. I'm not just talking about "jump-out-from-behind-the-door-and-go-boo" surprises of something like The Grudge and I'm not talking about "where-the-hell-did-that-come-from" surprises like at the end of Don't Look Now. To go back to that scene from The Night of the Shooting Stars: it is surprising to me that I'd end up feeling that badly about the death of the two most despicable characters in the movie. (And it is surprising to me that the Taviani Brothers are able to pull this off!)
There's another kind of surprise, though, or rather feeling of surprise, one that isn't really "in" the movie, but the audience may be able to sense it anyway: it's the surprise of the people making the film. In other words, the sense that the process of making the film was surprising to them in some way or that they ended up in a different place from where they started. I get this sense most strongly from watching movies from Robert Altman, Bernardo Bertolucci, Jean-Luc Godard (early on at least), Howard Hawks, and Francois Truffaut: that the people making the movie are working through something in the same way that the audience is.
Maybe this is too metaphysical, but, for me, Pan's Labyrinth has neither of these kinds of surprises: its deliberateness seemed to suck the life out of it.
(Sean Collins seemed to like the movie a lot more than I did, but he goes into more detail about the plot holes than I did.)