What a hideous disappointment. First, I have to say that I am not a fan of fantasy. At best, I can tolerate it, but (unlike magic realism) I hardly ever feel it adds anything to a realistic story. Pan's Labyrinth was no exception. The real-world story was sort of preachy and one-dimensional (I mean, the villain: WHAT a cartoon!), and the fantasy plot had some disturbing images but didn't really hang together, and the two stories really weren't related at all.
I couldn't shake the feeling that somebody had watched Spirit of the Beehive (the rare flick that does benefit from the addition of fantasy) and thought, "Hey, we could punch this up by mixing in a dash of LOTR and a little Harry Potter and the Chamber of Secrets and have a blockbuster!" In Spirit of the Beehive, the parallel fantasy is so subtle and so closely tied-in with what's really going on (which is a lot less melodramatic than in Pan's Labyrinth, although just as sad in its own way). Pan's Labyrinth, on the other hand, was too violent and scary to be appropriate for kids, but the storytelling was pitched at about a five-year-old level.
The acting was fine, within the limits of such cheesy roles. The gaping plot holes and the cheap CGI (not that I usually notice the quality of the animation, but here it was noticeably bad) only added to the disappointment of the poor concept and script. The only pluses I can point to would be the spunky girl who played the main character and the gorgeously-photographed scenery. Those aren't enough to save this from mediocrity. The only way this thing can redeem itself is if it gets a lot more people to see Spirit of the Beehive, which just came out in a gorgeous, newly-restored DVD. If I were you, I'd check that out and skip Pan's Labyrinth.