First I have to say that I really did enjoy *both* the book and the movie. But I think the book succeeded more with me than it did with you. I am not so analytical as you about either (and I haven't read the book/seen the movie as recently), so forgive me for not having anything profound to say about them.

I think what you said about the "this surreal, almost magical realist atmosphere" is where I said to myself, YES, that is what I liked about the book. Perhaps. I preferred, for example, the dead Stormwind brothers in the book to those in the movie (although I enjoyed their humor in the movie). I love to have characters and elements in a fairy tale that seem to me to be drawn from an archtype or ancient myth, and yet given a new twist, and that's what I got from the book.