It depends on who's determining/who's POV what the "problems" are. The FLE was brilliant in a few ways (and not just because I agreed with it wholeheartedly, HAHA). If it was "needed" most is going to depend on how you look at it.
First, gotta remember that a lot of the issues we see with the parks aren't as much of a concern for most guests. Example, I think AK is a mess of a park - I think it needs at least 75% of the work DCA is getting, just in different areas. AK's placemaking is the best Disney has ever done (although I have not been there yet, I think judging from pictures it even outdoes TDS). The problem is with the attractions (and lack thereof) themselves.
However, just like it's crazy, embarrassing, and almost absurd to some of us fans that the Yeti hasn't been fixed for almost as long as the ride has been open, the reason it's sat there is because the average guest doesn't know any better. And while *I* find an AK park, they use the old MGM trick of staggering shows so it's hard to stack them - the morning show of FOLK gets out too late to make the morning show of Nemo, so you have to go see the afternoon show of Nemo, etc. So you spend more time in shops, eating, etc. and spending most of the (short operating hours) day. So, to them, AK may not be the priority.
*CONCEPTUALLY*, I'd argue that yes, FLE is indeed the #1 issue at WDW when looked at from a wider view. One I think Iger shares - which is why I'm starting to really like the guy. I was neutral when he took over, but I've got to say what he has said and the actions (most importantly) over the theme parks in terms of direction I gotta like him.
I've been saying this for five years - our Fantasyland is a joke compared to everyone else's since 20K left. Disneyland's has always had more rides, and theyhave always been superior in theme (in terms of exteriors) and have been updated over the years. At Disneyland, Fantasyland isn't a straight line. You feel like you are exploring a bit, when you find a new ride around the corner in - get this - an exterior actually themed to the ride! (Crazy, when you grow up with our Fantasyland, I know.)
Disneyland Paris got a lavish budget and pound for pound (I haven't been there, just relying on what others have said and the videos I've seen) are supposedly superior to their counterparts here, and TDL's were newer (though, again, haven't been there, but based on what we are getting it sounds like they will now be #4 in Fantasylands, taking our place).
To be honest, we're going from last to first in this race. We are getting 2 big dark rides that no other Fantasyland will have (yes, Mermaid is hitting DCA as well, but we are looking at this from a MK-park-to-park basis). We are getting a rather lavishly themed area after another absolute Disney classic that is pretty sparse in the parks and always been a notable omission (B&TB). One of the classic dark rides (and my #1 favorite ride of all time) is getting demolished - so it can be replaced by a new ride with the same theme/story. (Trust me, that's the ONLY reason I'm not organizing a campaign already to save it LOL - not that it would make a difference, but at least I'd have felt better haha.)
Once that's done, my guess is we'll finally see Pan go down for his way-way-overdo extended rehab (updated effects like other parks, new queue/loading system, etc.) once Fantasyland isn't so bleak. It's always been my favorite land, but I notice I spend little time there. Aside from the big seating area over by Mermaid, there isn't any place that I feel compelled to "hang out" or just slowly wander around exploring. It's hit Snow White - Pan (if I have a FP) - Philharmagic - Pooh - Maybe one more Snow White - and then I go on to another land/park. The only food place there is my least favorite on property (mainly because of bad childhood memories of getting a turkey burger there and biting into it thinking it was a real burger). There isn't even much in the way of shopping.
So I think overall, in the image of WDW - this is fantastic. And would honestly do more for WDW in terms of promotion (with all the classic characters involved - now you can dine with Belle and Beast in the castle! come and ride under the sea with the Little Mermaid! Meet all your favorite princesses in a storybook setting!) than a similar addition at Epcot, MGM, or even AK. It's also a source of pride - Disneyland is, well, Disneyland. Always will be. And though most people won't experience the overseas parks, the management of Disney has and I'm sure they are also tired (not the money, but the parks people) of seeing every other Fantasyland making ours look quaint.
So yeah, FLE is what WDW needed most right now. It's the most happy I've been about a project...ever. I was even happy when it was in it's first incarnation, but to get a new Snow White ride (and still be able to relive the old one by video) instead of that Fairy stuff is all right by me.
And we keep downplaying the Meet & Greet portion (which was scaled back, but some of the original proposals for more intricate experiences could also come later), but it's going to be incredible placemaking when our Princesses finally have a somewhat natural place to be when they've been in a freaking (TEMPORARY!) Circus tent for a decade or two.
MK won't ever equal the amount of attractions at Disneyland, but the slightly chaoctic (in a good way) nature of their Fantasyland wasn't planned all at once like this is being. It just sort of happened as the park grew (giving it it's own charm). We very well could again be the flagship MK, should a few more things be updated as well as they are keeping Haunted Mansion up lately.