When we first meet the title characters in Rebecca Miller's stunning "The Ballad of Jack and Rose"--the intense, rail-thin Jack (Miller's husband, Daniel Day-Lewis) and the ethereally beautiful young Rose (Camilla Belle)--their devotion to each other is as palpable as their relationship is ambiguous and unsettling. Are they father and daughter or lovers? The confusion is intentional. Soon we figure out that Jack is indeed the 16-year-old girl's dad, and we begin to understand their unusual intimacy. Rose, whose mother is dead, has been raised by her angrily idealistic father in the abandoned commune he founded in the early '70s on an island off the East Coast. A rabid environmentalist whose days are numbered by a bad heart, Jack has shielded Rose from the contaminations of "plastic," money-obsessed America. She's a true innocent, living in an isolated Eden of her father's creation. Like all paradises, this one is about to be lost. And like all innocents, she can be dangerous.

Miller, the daughter of the late Arthur Miller--whose own works were propelled by a fierce idealism--is fascinated by outsiders. Think of the three women in "Personal Velocity" or the delusional 10-year-old heroine of "Angela." Miller leaps to a new level with "The Ballad of Jack and Rose," a movie that looks at the legacy of the '60s with fresh eyes, unclouded by nostalgia or complacent regret. Jack sees the world in black and white, but Miller sees all the colors in between. Funny, wrenching and unpredictable, "Jack and Rose" has a refreshingly grown-up sensibility. Miller never tells us what to think about her volatile, morally complex characters. Scene by smart scene, our sympathies and judgments are in a state of fascinated flux.

Jack, a Scot who inherited a family fortune, is a figure both intimidating and charming. He has the ruthlessness of the true believer. He's waging a one-man war against developer Marty Rance (Beau Bridges), whose housing development is going up on the wetlands next to Jack's land. But as much as he wants to keep the real world at bay, Jack knows he's a dying man. He needs help, so he invites his part-time girlfriend from the mainland, Kathleen (Catherine Keener), and her two teenage sons to live on the island. Rose feels betrayed and threatened, and seeks revenge on this rival for her father's affection, unleashing a literal (and symbolic) snake into their garden.

How can Rose hurt her father the most? By giving up her virginity to one of Kathleen's sons. In a brilliantly funny and touching scene, she puts the make on the horrified Rodney (the gifted Ryan McDonald), a shy, overweight, witty boy who wants to be a hairdresser. She has more luck with the surly, skanky Thaddeus (Paul Dano). The joyless deed accomplished, she hangs out her bloody bedsheets for her father to see. This is a coming-of-age story unlike any you've seen. In becoming her own woman, Rose reveals a willfulness that can be just as monstrous as her father's.

Belle uses her blank, doll-like beauty to unnerving effect: she has the vulnerability--and the amorality--of an unbroken colt. Keener, who usually plays brittle, angry urban women, has never been so touching. And Bridges's Rance, who seems, with his pink madras shirts, like yet another stereotypical evil developer, turns out to have surprising nuances. Jack's ultimate confrontation with his nemesis (a scene of cunning sophistication) reveals just how much the two men have in common.

Day-Lewis, who imbues Jack with a ravaged, Keith Richards charisma, is once again extraordinary. It's hard to think of another actor who could embody so seamlessly the powerful contradictions of this near-tragic figure: a man with contempt for money who uses his checkbook to control everyone around him; a communal dreamer who's cut himself off from other people; a utopian with an authoritarian personality; a man of conscience horrified to discover the depth of his love for his daughter. But Jack is no villain, nor Rose a victim. Miller has respect for the humanity, and the dreams, of all her characters. If she knows how dangerous idealism can be, she also knows the dangers of living without it.