The trouble with Borat, and the reason the movie is an artistic failure while still being quite entertaining, is simple: its staginess.

Borat is a means to comedy.
Borat is not a comedy end in himself.

While Borat's malapropisms and strange behavior are obviously funny, they are in every case funny because these things are happening in the presence of someone who isn't in on the joke. Take away the spontaneity of an interview and the anything-can-happen feeling of contingency and all you're left with is Latka: a funny accent, not a cultural weapon.

The narrative scenes and the various staged encounters do more than waste time, they ruin the things that make Borat more than just a one-note joke. We shouldn't be thinking about whether or not Pamela Anderson is in on it (she was, of course), or trying to separate salaried actors from real people, or enumerating the many ways in which the movie violates its own premise. (#1: They forgot to account for a cameraman. You must always account for the cameraman.) What Borat is good for is shining an absurd light on social mores, taboos, and hypocrisies, and exposing those things about our culture that are kept hidden by social convention. The skits from the TV show do this; about a quarter of the movie does it; the rest of the movie does not.

Boffo box office and many laughs aside, Cohen blew it.