I actually just re-watched this movie the other day and I think it's pretty great. No, it isn't the musical word for word, but does it really have to be to be a good movie? And would the ballads really work in a film setting? I think they would come off as too cheesy in a movie because they're such a theatrical storytelling device.
I think the style they chose really works for the material as a whole. The only thing I really hate about the film is the way they cut out a lot of Johanna and Anthony's actual interaction (which gives the song "Johanna" an unneeded creep factor absent in the stage version).
Keeping BroadwayWorld Illustrated