Let me begin my review by addressing those who are undecided whether to purchase this version (Luhrman) or the Zeffirelli. There seems to be a bias amongst educators (bordering on the arrogant) that the Luhrman version is somehow less "authentic" than the Zeffirelli. Simply performing "Romeo and Juliet" in doublet and hose, however, does not make it any more "Shakespearean". In fact, I would argue that modern-dress is more in keeping with the spirit of the original as Elizabethan drama had no elaborate sets or costumes; doublet and hose WERE modern-dress in Shakespeare's time. If we discount "updating" as a reason to discount the Luhrman version (which in my experience is invariably the excuse), we have to judge the movies on how well they illuminate/connect/inspire Shakespeare's words for our students. In my opinion, the Luhrman version does a better job of this than the Zefferilli.
First, the updating works (for the most part). My students clearly understood gangs and rivalries; presenting the Montagues and Capulets as such, eliminated questions as why the two families hate each other or how the feud got started (answers which are outside the text). The guns and cars appealed to the boys; the love and romance appealed to the girls. My students could see themselves in the context Luhrman provided; they could relate to what was going on screen as present and relative, not merely events from 400 years ago.
Secondly, casting famous actors (DiCaprio and Danes) as the leads hooks many of my students at the beginning. They watch the movie BECAUSE Leonardo DiCaprio is in it, but soon the magic of the Bard's words (which they struggle to follow at first) keeps them interested. DiCaprio IMO is uneven; some scenes he performs better than others. Danes's performance (other than her fake crying in the Capulet vault) was generally strong and very believable; her words did not seem "acted" but rather natural. The supporting cast was also very good with Tybalt and Benvolio standing out.
There were some scenes that didn't work well for me. The Capulet ball in particular was strange. Mercutio came dressed in drag and this (unfounded) homosexual subtext was amplified by him prancing around on the stairs with some Chippendale dancers. Just plain strange. Also, the Queen Mab speech was weird and luckily cut short; Luhrman did try to tie it into the events as a sort-of intoxicated rambling at the "pre-party" (complete with Ecstasy) before Romeo crashes the ball. Another weak performance was Lady Capulet who played it for laughs (which again I couldn't see from the text), and it was an unconvincing performance played that way. The only time Lady Capulet seemed believable was when she played it serious (Tybalt's death, the argument with Juliet and Capulet). Some students also didn't care for all of the musical numbers, but most liked how Luhrman tried to include contemporary songs into the movie.
Some of the sequencing of scenes are a bit off, but this is a movie students definitely love and get into... which I think is how Shakespeare would want it.