MMD has written some great posts about this and he's tried looking at contemporary Dylan's songwriting through what he called a critical, historical approach (he's a teacher, so he knows more than just Dylan, charles!). And he was just getting started, so I wish he'd come back and expand upon his arguments.
For me: Love and Theft -- I think there is something happening with this album, with Masked and Anonymous, with Chronicles that doesn't just invite, but requires a kind of critical, historical approach. The longer I think about it, the more I think there is something going on on a grand scale. Not in all the songs, but in the best ones (Mississippi, Floater, e.g.) I think I see it in a couple places on TOOM, but it comes together on LT.
He invents a new method of writing -- complex allusions to and quotation of high and low culture, building on the shifting narrative position of the BOTT (Tangled up In Blue) and Desire period but pushing out beyond it, beyond narrative altogether -- to replace his lost early "channeling" of songs. He says he can't do "that" any more, and it's obvious. But this starts to look like a full-fledged method and style rather than the random tossing together that people say it is.
And the material, the building blocks with which he is writing are mythemes (phrases, voices, personas that are foundational to America) rather than stories in the traditional sense. S0, two lines here, four there, certain key phrases. In this sense, the same American-mythical elements that are there in the the early Guthrie 60s, still there in the Blonde on Blonde Beat/Surrealist style, and in the amazing combination of those in the Basement Tapes (JWH) period, and even in the Pat Garett to Desire Period, those mythical elements are now distilled, even abstracted, and shorn of narrative. They are left to create meaning in relation to one another. But in a way that requires historical, cultural knowledge (or else research).
Meaning is now created by suggesting relations between the big myths of America (rugged individualism, reinvention of oneself, the frontier), the idea of end times (that American apocalypticism), and the ways these are expressed in American literature, film, music -- high and low culture-- and the way all of this relates to classical sources, old empires.
That is, the more I listen and trace out the literary and historical references, the more Dylan seems like a great American thinker, a great American artist -- a Twain, a Poe... or a Delillo)
I know that some people think this style is just laziness and thievery. That seems absurd to me. It's just too shot through with self-awareness and obvious textual and historical allusion. And, that argument feels like the voice of the petty-bourgeosie. Like intellectual property is the absolute and art emerges from it. Rather than a way in which art (and some artists) make a buck (which I know Dylan has made plenty of). Again, I don't care about the accountants. And I know there is no moral argument there. No one is losing money because Dylan is quoting/parroting Timrod or a Japanese novel. To make that a moral issue is to have been fully conditioned by capitalism's lawyers.
And I know there are people who can't enjoy it because his voice is shot or they are not interested in the (allusive, historically referential) musical styles (or the fact that his bands don't always play those styles in an inspired way). But again, I am seeing this (as is my professional weakness) as text. I am enjoying the text and the performance as part of the text. His singing style is a perfect performance of the anachronism at the core of the project.
Now, me...? I love the sound of a lot of the songs on the album. Despite knowing that they are not necessarily amazing musically (in a technical sense). For instance, I know Lonesome Day Blues is not original and there are lots of blues musicians who play those licks and that style better (and are more "authentic") but I love the hell out that song. It makes me happy. Not just that style, but that performance on LT. And the references to Huck Finn (e.g.) and the old-fashioned singing style make me happy, make me smile, make the experience rich for me.
And finally, there are those who object to the very idea of approaching the music this way. I've read at least of couple of posts here recently about claims like I've made here (in a very provisional and rough way, mind you) being "pseudo-intellectual". This is not "pseudo"-intellectual. It is actually intellectual. And that may not be of interest to you, but I think it is of interest to Dylan in a certain way.
I think he sees himself as part of American literary culture. And his themes, his style and his material put him right in the mix. He doesn't fit into the avant-garde of music or literature or poetry. I don't think he is academic in that way. He's too unlettered for that. But that happens to also be very American. And he clearly has immersed himself in and now embodies decades (even centuries) of American thinking and art. In that sense, he is like an old scholar, a cultural museum. So, there's no escaping that.
So, I guess I am saying that Love and Theft is the better album to me...because it more fully realizes this new project in Dylan's work.