It actually works very well, to the point where you wonder why it hasn't been done before. The codes of loyalty within the military and indeed amongst men enable Iago to quite easily throw a spanner into the works. Othello is no longer a gullible idiot but a general who is perfectly valid in trusting a colleague. Never has Iago been a character that could be lurking within any of these organisations; the codes and pomp which Othello trusts in so completely are proved to be incredibly fragile.
This is all good. However's there's something missing.
It's the tragedy. Because Othello is no longer particularly prone to jealousy and Iago employs no particular skill, the play loses all sense of tragedy. Adrian Lester is very likeable as Othello- probably the most likeable Othello you'll meet- so there's obviously sadness in the fact that he was tricked. However Hytner strips the part of any real depth- Othello's just an ordinary guy who got done over by his best mate. To fit the modern setting, the racism is played down. Iago only uses the racist slurs when drunk and the senators are relatively diplomatic. It makes a nice change but it makes Othello's achievement less remarkable.
But as we all know, it's all about Iago. Except in this version, Iago is interestingly underplayed. Rory Kinnear makes Iago a lot rougher and believably working-class in this version, so we are constantly aware of the social divide between them. He also seems to genuinely believe that Othello's been cuckolding him and it's the first time I've ever believed that Iago believed it. So the tables are really turned as Iago is proved to be deluded and paranoid.
My main problem is Desdemona. Modern Desdemonas don't work. Shakespeare is all about contrasts, "fair is foul and foul is fair", etc. Desdemona should be the epitome of purity, hence why Iago delights in smearing her reputation. He envies her for her pure goodness- something which he will never have. It makes the tragedy more believable and profound because we know that this girl is completely incapable of adultery- it's beyond her sexual experience. We should feel shocked and outraged by Othello calling her a 'whore' yet in this version it just sounds like an episode of the Jeremy Kyle show. Irene Jacobs in the 1995 film is the only Desdemona that has ever seemed convincingly pure and naive. Now Juliets have started getting younger, surely we can have some younger Desdemonas, rather than thirty year olds pretending to be schoolgirls.
It's a really interesting version of the play and reveals some interesting themes but it lags at the end. At that point the tragedy should be ramping up but it loses that dramatic edge.