A really bad misjudgement. Tom Bombadil was, I suppose dispensable, but I don't think the Scouring of the Shire was.

In a sense it what the whole book is about - ultimately there's no escaping trouble even in a safe backwater like the Shire, and before it's through the small people have to sort things out for themselves. And I think it's important to see Saruman reduced from a powerful and terrible enemy to a mean and pathetic one. If it was a question of time and money, I'd far more readily have dispensed with some of the big battle special effects.

(And I imagine they've left out Ghan-Buri-Ghan and the Wild Men as well.)