Yes, this film is a classic. It's basically the premise for LotR, with baby replacing the One Ring to Rule them All. I pulled the DVD out earlier this week to watch, but never got around to it. I was babysitting my bad a$$ nieces a few months ago, and took them Willow, after 20 mins they were all sitting down watching the movie. There's only one effect that doesn't hold up and that's the giant troll/dragon.
First let's talk about 17 year old Warwick Davis carrying this film on his back. Willow is self-doubting, but capable, wise, brave, naive and optimistic. Warwick was a helluva actor. He should have had more than Leprechaun roles after ths, but the movie flopped. And Val Kilmer as Mad Martigan, the greatest swordsman who ever lived. Their chemistry was everything you want from the 2-leads. The battles are classic - General Kael vs Airk, Kael vs Mad Martigan, Tir Alseen, even Bavmorda vs Resell. The movie has quite a charm and excellent score. If you own the DVD/BR watch the commentary and behind-the-scenes doc.
BTW Lucas and Claremont did the sequel via books. They are trizzash. Well, I never actually finished the trilogy but 1.5 books into and it's trash. First, apparently they can't use the name "Willow" so he's Thorn Drumheller