Dragonslayer is great. Yeah it's a bit slow in spots but the highs definitely far outweigh the lows. Vermithrax is an absolutely beautiful creation. Can't fault a movie with huge fans like Guillermo Del Toro and George RR Martin. The Last Unicorn is also strong contender for best 80s fantasy flick. It shares a lot of hallmarks with other Rankin/Bass productions like The Hobbit while definitely having a feel and tone that's seems somewhat unique to itself.

You can do both. Most major open world games do in fact. GTA and Saints Row both have linear stories with a great sense of progression but also give tons of things to do outside that. You can waste most your time exploring a vast city if you like. Kingdoms of Amular and Darksiders 2 are great templates for how an open world Zelda game could work.