DON'T READ THIS REVIEW IF YOU HAVEN'T SEEN THE MOVIE!!
The reason is sort of complicated. I can't figure out a way to review the movie without revealing spoilers, so if you haven't seen it STOP READING NOW!!!
I really liked this movie, definitely more than Ring 2 and probably even more than Ring 1.
The movie takes place some thirty years in the past. Sadako has joined an acting troupe and immediately runs into people disliking her. Things get a lot worse really quick and the body count starts to add up. It turns into a Frankenstein-type situation where the actors are basically the villagers, out to destroy the "monster" in their midst even though said "monster" has not actually done anything herself.
Here is where the main spoiler lies. There are two Sadakos. Think along the terms of Kirk in The Enemy Within, split into a good Kirk and an evil Kirk. It's the same way with Sadako; the Sadako we see in the acting troupe is the "good" Sadako. She possesses some inherent psychic abilities of her own, including psychokinesis/telekinesis, but she especially possesses the ability to heal people as she demonstrates at least twice.
The other Sadako, the evil one, somehow "split off" from her good twin and has been kept hidden away by Sadako's supposed father, drugging her to keep her from growing stronger. When the "good" Sadako is savagely murdered by the acting troupe the balance between the two Sadako's is broken, giving the "evil" Sadako a chance to take over the "good" Sadako's body.
The "newly arisen" evil Sadako then begins to wipe out the entire acting troupe who had killed her good sister and had come to the house to kill her. Later her "father" finds her and, I believe, the "good" Sadako has become dominant in the one body, but the "father" drugs her with some kind of poison then tries to kill her by hitting her, dumping her in a well and sealing the well up.
Here is where I will probably disagree with a lot of people, but I definitely feel sorry for the "good" Sadako, and I don't condemn the "evil" Sadako. It seems to me that the evil Sadako was always acting to protect her "good" sister, even if what she did was inherently evil by human standards. She killed one actress which then opened up the lead role for the "good" Sadako . (Although the actress was not exactly overly friendly towards the "good" Sadako either.)
The members of the acting troupe were killed by the "evil" Sadako, I think, in retaliation for their killing her "good" sister. The doctor that was killed during the play, I believe, died due to the "good" Sadako's inability to control her own psychic powers. She apparently had not been trained at all and when threatened her abilities tended to go out of control. I don't think she meant to kill the doctor at all, actually, but her energies were not under her control just as, when she was being attacked in the room by the other troupe members, her energies managed to destroy the mirrors in the dressing room.
There is a confusing part, though, and that is the female reporter who basically started the ending problems in the actor's troupe by convincing one girl to play a different tape than should have been played, triggering off "good" Sadako's uncontrolled powers. The only assumption I could make about why this woman would do that and also bring a gun to kill Sadako is that she could be the daughter of the reporter than died during the ESP demonstration shown in the films. That would give the woman a motive for going after Sadako, rather than just having her trying to kill Sadako for no good reason at all.
Room is left for speculating who Sadako's real father was. There is the possibility that it was some kind of demon which could explain the good/bad nature of the twins. There's no solid evidence for that, though, and various other possibilities exist.
For a professor supposedly learned in ESP he sure didn't seem that he knew as much as he should. For one thing he should have trained "good" Sadako in controlling her abilities and even in using her healing abilities, although in same way that should wouldn't draw attention to herself. If he was so worried about what could happen with the "good" Sadako then why did he allow her to live on her own and to interact with others?
As far as the relationship to events in Ring and Ring 2, whichever Sadako died in the well died after nearly thirty years of being alone and in darkness (although what did she eat? It was hinted that both Sadako's were physical beings, and physical beings have certain physical needs.) Whichever Sadako was in the well would have gone insane from such treatment, even if it was the "good" Sadako.
Thus, the "vengeful ghost" aspect of Sadako from Ring and Ring 2 could either have been a produce of the "evil" Sadako or a "good" Sadako driven to insanity by the action of others. The "good" Sadako did not intentionally hurt anyone at all. The killing of the doctor during the play was not intentional, I feel; rather, I think, as I said above, that it was uncontrolled energy or perhaps even energy being fed into the "good" Sadako by the "evil" Sadako who sensed that her "sister" was under attack (Although a better time for this would have been when Sadako was being beaten to death by the acting troupe later, but maybe there were just too many people to deal with, even for the "evil" Sadako).
It's very possible that the "evil" Sadako was able to send out an energy form of itself to be near the "good" Sadako which would account for some of the odd pictures that were taken of her. As for the "cursing" of the entire acting troupe, why would the entire group be cursed, even by the "evil" Sadako? The one actress died, I think, because the "evil" Sadako considered her to be in the way of getting the "good" Sadako the lead part. The troupe leader was killed by Toyama, not Sadako, and only after the leader tried to kill Sadako himself.
No one else in the troupe was attacked by either Sadako. Why the picture showed the distorted faces of all the troupe and thus the "cursing" of the troupe I don't know other than it could be related to the energies bleeding off of Sadako interfering with the camera and film.
In any event, I think this could be the best of the three films and is a very, very interesting film to watch.
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