1. The fact that you disagree with the author’s conclusion is not a reason for advising against publication. Quite the contrary, in fact. You have been selected as a peer reviewer because of your eminence, which means (let’s face it), your conservatism. Accordingly if you think the conclusion is wrong, it is far more likely to generate interest and debate than if you agree with it.
2. A very long review will simply indicate to the editors that you’ve got too much time on your hands. And if you have, that probably indicates that you’re not publishing enough yourself. Accordingly excessive length indicates that you’re not appropriately qualified.
3. About the author’s citations: There is a potentially infinite number of citations. Some of your favourites won’t be in the list of references. Remember that a good paper is not necessarily the one that you would have written. The purpose of citation is:
(a) To give authority (not all the conceivable authority) for the main propositions advanced; and
(b) To suggest further useful reading; and
(c) To indicate how the paper makes an original contribution to the existing debate. For that reason, and that reason only, the parameters of the existing debate need to be sketched.
The purpose of citation is not to show that the author has read everything/read everything that you’ve read/knows how to use Google Scholar/Endnote etc.
4. Be kind. Even the most woefully inadequate paper has taken a lot of writing and the author will have invested a huge amount of emotional energy in it. It is terribly easy to be critical, and the criticisms can damage people personally. It is much, much harder to be kind, and therefore to be kind will demonstrate your cleverness far better. Which is what it’s really all about.