My first reaction was that the film would be a tad scary for kids. If they found an Orangutan to be scary, they're not going to enjoy that they changed King Louie to an Gigantopithecus. Not only that, from character arc to overall plot, this adaptation is generally darker. Shere Khan has a more prominent role as a villain scarred by his past, which fuels his hatred for humans. This makes some of his actions genuinely scary. And except the Baloo portions (more on that later), the film has a generally dark look as well.
However, beyond all that, it goes back to what @Peng said in regards to the CGI. I saw it in a regular theater and even that looked impressive. Although the film doesn't aim for photo-realism, the rendering of the animals is still realistic. When Baloo stands up and roars, his huge figure engulfs the entire screen. Shere Khan's rendering is especially scary, what with his scar and all. This, combined with the dark look and plot, means that this is not a film I would recommend for children.
It is with this adaptation that I finally realized nostalgia can be tricky to deal with. I felt the Mowgli and Baloo bonding sequence was woefully short. After about 10 minutes of screen time, they don't want to be separated from each other. I thought (still think?) this was a huge misstep... until I came back home and saw the same sequences in the 1967 animated version. The screen time accorded to the bonding is roughly the same. (Silly me!) Because I had seen it so many times, it had gained more weight in my mind that might have been possible on a single viewing.
It could also have been a conscious decision on the part of Favreau and Marks to use nostalgia to guide the viewers through this slightly modified adaptation. All the same characters and plot elements have been tweaked to make things more interesting. And like my impression of the Baloo/Mowgli relationship, we are reliant on our nostalgia to keep up hooked despite things moving at breakneck speed.
I did miss some things though. Elephants are given their due in this film as gentle giants without whom nature wouldn't be what it is. There's a beautiful sequence of Mowgli going into the elephants' pit to save a stuck baby elephant. However, in keeping with the darker tone of the film, we observer this act from afar (along with Bagheera and Baloo) rather than actually take part in it. And of course, Colonel Hathi's march would not have made sense in this version, but it is most certainly missed.
There are some changes for the better in this one though. Shandling's always high mongoose is a welcome addition. Scene such as The Water Truce and Kaa telling Mowgli his past add a lot more interesting backstory to the characters and jungle itself that the animated version sorely lacked. I had goosebumps when Baloo began reciting the Law of the Jungle as Shere Khan looks ready to pounce on Mowgli. It was a truly majestic sequence.
I will probably end up watching this one again with my mom, probably in Imax 3D, given @Peng's glowing review of the film as seen in that format. But no matter what the format, I would say this deserves to be seen on the big screen. Go for it!
The Jungle Book (2016) - 3.5 out of 4
P.S. Matt Zoller Seitz's review of the film is the definitive one for me.