Well, I guess it's time for me to join the debate.
Live action doesn't seem compatible with the Zelda series, except in the case of TP (which admittedly doesn't even completely do a photo realism thing). It would be too difficult to find actors who not only share a physical appearance but also a matching voice would be incredibly hard, if not impossible.
As for the art style (if they use animation), really there's a lot of different ways it could be done depending on which game is used as source material. Disney could easily do the art style for OoT/MM and the classic games before OoT very well and very fittingly.
Pixar could just as easily do the art if the source was one of the Cel Shaded Zelda games such as Wind Waker. After all, just look at Up and The Incredibles. There's no doubt in my mind that they could do the art for a Toon Zelda Movie just as easily as Disney could handle one of the more classic titles such as ALttP.
Another good idea for the art style is what was used in Final Fantasy VII: Advent Children. That would be perfect for a TP, OoT, or MM movie, don't you think? Just look at
Cloud from the movie. I don't know about you, but I think that would flow very well with the style of OoT/MM/TP.
As for voice acting, well it probably wouldn't be incredibly hard to find a person who could do a decent Zelda voice or something.
And another thing to consider is Link's speech habits. While I am all for the idea of Link talking, it would probably hinder the success of the movie because many Zelda fans, to my knowledge, hate the idea of Link speaking just as much as Zelda.
Another thing to consider is Nintendo's involvement with the thing. Shigeru Miyamoto and Eiji Aonuma already have their hands full trying to deliver the things they want to deliver at E3 this year with Zelda Wii, but if they were involved in a similar way to their involvement with the Capcom Games, then it would be even better. Koji Kondo would be able to fully orchestrate the music so that they know it'll fit the moments perfectly as well as the feeling and Eiji and Shigeru would both take on directing/writing roles. And so on and so forth, blah blah blah.
Honestly, if those elements all came together, then I could definately see it becoming one of the highest rated video game movies of all time.
Unfortunately, as said before, Nintendo is busy with the development of Zelda Wii and chances are, they don't want to take the risk of the Zelda Movie becoming just as horrible as the Super Mario Bros Movie and heck, if they poured enough money into it, they may very well become a repeat of Atari (for those of you who don't know, Atari is an old video game company from back in the days when Sega and Nintendo were rivals and they poured a lot of money into an ET game, which turned out to be a major flop and pretty much killed Atari), and I'm pretty sure I speak for all of us when I say that we don't want that to happen to Nintendo (if any current gen gaming company deserves it, it's Microsoft).