I don't think he's evil. Elves are protectors, they cherish what they have and they hate the new ways. They hate changes. So locking his precious elves in their precious castles is the elvish way of dealing with war (:
I think Thranduil is very wise and charitable king. True, fangirls mostly love him for the grace of a thousand cats and the fact that he's really really really ridiculously good looking.
But he's a great king who makes sure elves prosper. He raised a son - the prince, but was not above taking in an orphan. I do believe he raised them entirely on his own.
Oh, and let me quote it, "Thranduil is more antagonistic toward the dwarves in the films, locking them into dungeon cells as soon as they arrive, whereas in the book,he was more generous, giving the dwarves (aside from Thorin, whom he had previously captured and imprisoned) free run of his stronghold until they proved insulting and disagreeable toward him."
Yes, he did orgasm as he saw a box full of jewels, I think mostly because they remind him of starlight.
He is arrogant, but not too arrogant - common elves do not fear him, do not kneel for him and are criticize and question his doctrine if they feel like doing so. He does carry himself in a very proud and sophisticated way as a 3000 years old royalty should.
Thranduil would be nearly flawless (for an elf, with all his inborn stubbornness and prejudice common to the race) if not his lust for diamonds, but it's not consuming him, so that's alright.