First off, Im one of the people think Blair Witch Project is an good film. The first time I watched I was genuined chilled and on edge throughout. The second time, it did lose a bit of its punch. The ending was a bit too vague and senseless, but in my mind the best horror film ever shot entirely from the perspective of a camera crew.
The second best is the one I just got through watching, REC. It is one amazing thrill-ride. The last 20 minutes or are harrowing, mysterious and just plain intense. It even ended on a big time horror movie cliche, where the victim gets dragged by the evil thing away in the darkness, but I didnt mind that so much. And kudos for using a substance that actually looked like real blood. It really helped to highlight the rawness of this film.
This movie is done by people who are steeped in the genre. There are hints from their influences throughout. There's Blair Witch, obviously, a bit of 28 days later (the rage virus and the plague in the apartment building are similiar in effect, if not similiar in origin) and Session 9 (the secret recordings found that clue us in on what's going on underneath the surface of the film).
One complaint I do have is the sudden and out of the blue connection between the virus, the little girl, and devil possession. It just leaves too many questions. So many that it seems a bit contrived and unfulfilling. Another quibble is, even though REC clocks in at a swift 75 minutes, it still could have been shaved down. A few of the early scenes seemed superfluous and easily axed without harming the integrity of the film. Obviously some of the slower scenes help to give depth to the characters, make them all the more human, etc, but still there was a bit too much of it, in my opinion. It was almost as if a nearly flawless short film was stetched out as far as possible in order to make it a feature length film..
There are of course the same logic problems Blair Witch has when making movies from the persepective of a hand-held camera. One being, at some point, when the terror and panic reach a certain level, it seems highly unlikely the cameraman is going to continue filming. But REC for the most part, and in some scenes ingeniously, by-passes this flaw.
All in all, a pretty darn pleasing and effective horror film.