I caught a few minutes of this episode because my friend downloaded it...... and from what I saw, plus that awesome screen shot posted above with Guy looking like some sort of weird bird....
....did Studio Perriot take all of their main animators and fill animators that were worth a damn and just put them on movie projects?

The animation quality of Naruto has been declining for awhile... it was never fantastic and had a lot of moments where it just looked terrible, but at least it was still well modern animation.

Recently it seems like they are cutting corners by doing the old school "use frame of animation and move only the mouths" technique, the worst part of which they pick frames like that one above with Team Guy to do this corner cutting with.

The effects for the Mangekyo Sharingan looked like they dropped a series of frames into photoshop and used a frosted glass filter then Distort ---> twirl.

There is nothing wrong with computer generated effects/filters etc... but honestly the end result of what they did felt just thrown together.....and pretty much looked ugly.