I disagree. They both did essentially the same thing. Low budget indy film, marketed really well. But Paranormal Activity has some things going for it. On a psychological level PA does an incredible job at suggestion horror, no shock and sfx/gore to keep the suspense up. Making you afraid of just a camera angle, "oh no, whats going to happen now!" Also the character interaction is far superior in PA, there are several minutes where not much happens, but you don't get bored, you like the couple and care about what happens to them. I dont' know about you but by the end of The Blair Witch Project I was just like get on with it and die already!
I've actually been looking forward to watching it again at home because I think seeing it in the theater only made the movie better. It's MUCH more fun watching any horror movie when there are freaked out college girls behind you, or a packed theater with people screaming. I remember smiling through several scary scenes though because I thought they were just done so well, and after the movie standing up and this girl behind me who was freaked out for most of it says why are you laughing it's not funny! Oh good times!
I did not care for the ending. Apparently Spielberg watched the movie for this guy and made the suggestion to use one of the alternates for the theater release, but it seemed a little out of place. I wish he would have gone with the original ending (which you can read about on the wikipedia page if you are interested).
But all in all I would rate it favorably. I'll have to watch it again for anything more definitive than that.