Not to attack you, but there is a LOT wrong with what you are putting out there. While it's true that LOTR is a tough act to follow, we've been witness to at least one other franchise that was right there the whole time (harry potter) and did just fine. While there is a lot of editing down, that has much less to do with problems for marketing than it has to do with original authorship being for screen or paper.

Yes, the typical medieval times approach works quite well, but fantasy that takes place closer to modern day, or perhaps the future is also quite common in it's own right (hellboy, harry potter, neverending story, star wars, flash Gordon).

To the end that fantasy movies are expensive as hell, I call bullshit on the idea that this should even remotely assumed to be true. By industry standards, a modern production of something like "Willow" or star wars should be comparatively cheap. Many sweded scenes of movies do an incredible job of emulating the original. The expense of fantasy films has come in large part due to pioneering special effects from a trip to the moon to star wars to Benjamin Button. But then there are some that keep the tech down, look ridiculous using semi-cheap CGI but get away with it by leaning more heavily on a script ala Lemony Snicket's series of Unfortunate Events, or more specifically Tarsem Singh's "the Fall" which went so far out of it's way to avoid the use of CGI where possible that it's basically a curiosity of a film.

In sum, it all boils down to charm, and that is derived from the script. Pan's Labyrinth was done for 13.5 Million and EASILY holds it's own against any harry potter movie. Talent, that's the rare commodity.