This sequel is mediocre. Let's address the negatives first: There are numerous plot holes, starting with Captain Hook's flying ship during WW2. Why didn't any planes notice or report it? Why didn't Hook go directly to Pan's hideout, especially since he supposedly blew it up and knows the way? The crocodile's offscreen replacement with a poorly-designed octopus was disappointing.
Character changes are drastic and poorly fleshed out. Peter Pan's sudden emotional shift feels insincere. Tinker Bell's near-death due to disbelief is illogical, given how many people likely don't believe in fairies. The Lost Boys are annoying and lack depth compared to the original. Hook is portrayed as foolish, unable to distinguish Jane from Wendy or use the same method to kill the octopus as he did the crocodile.
On the positive side, the animation is beautiful, and the world of Neverland is vividly detailed. Wendy is amazing, and while Jane starts off annoying, she improves after spending time with the Lost Boys. Smee remains true to his character. The scene where Wendy tells her son about Peter stealing Hook's treasure is impressive. The ending, where Peter meets a grown-up Wendy who still believes in him, is touching and reflects the importance of holding onto childhood memories.
Overall, the movie is just average. Die-hard Peter Pan fans might have mixed feelings, but Hook being bullied by the octopus provides some laughs, albeit not as much as the original crocodile.