Not great. It manages not to be stupid, but it also manages to avoid being very good.
Its problem is that it's not focused on either Freddy or his victims. The cast of every Nightmare on Elm Street film  can be divided into into three groups: (a) misunderstood teenagers fighting for their lives, (b) almost psychotically dense adults who mean well but don't have a clue, not to mention often being more than a little fucked-up, and (c) Freddy Krueger. I like that. It's like the evil anti-matter twin of all those kiddie power fantasies where no-one knows you're secretly Mega-Duper-Man or Sailor Moon or something.
 - he says, not having seen them all yet.
Unfortunately in this film, the teenagers are even more obviously disposable than usual. The adults are the heroes, despite not being the ones in danger. Freddy's not after them. Of course he'll happily kill anyone who gets in his way, but they'd have to move heaven and earth even to achieve that much. How do you fight a dream? Sad to say, the original script by Wes Craven and Bruce Wagner would have made for a much stronger film. That was about children driven to despair by their Freddy-haunted dreams and travelling somewhere to commit suicide. That could have been something. We might yet have seen the silly Nightmare on Elm Street franchise spawning something genuinely powerful. Unfortunately suicide was a taboo social issue in America at the time and its inclusion here would have apparently been seen as exploitation of disturbed youth, so it had to go.
In the end they kept the mentally disturbed teenagers, but stuck them in an institution. This admittedly makes for a livelier cast than usual, but with nothing to do. They're in a loony bin. If they even talk back to the doctors, they go in the Quiet Room. The film still has some suicide and self-mutilation, but it's been rendered toothless by the unwilling victims being directly controlled by Freddy.
What's more, the acting is poor even by Nightmare on Elm Street standards. Most of the teenagers are fine when they're just mouthing off to adults. One of them is even quite good, though he's not around long. However when asked to stretch themselves, for instance when turning into their own dream personas such as a knife-wielding punk... nope. Sorry. Not up to the job. Frustratingly even this emasculated material is weaker than it could have been. A fat girl thinks she's going to be a Hollywood actress. A black kid who's always being sent (by the lily-white doctors) to the Quiet Room. An ex-junkie. This had potential, but sadly the teen who comes off best might be the nerd king, sorry, Wizard Master. (Not Dungeons & Dragons, no, no.) That says it all, really.
Eventually I realised that I wanted Freddy to kill the whole cast. The teenagers? Sure, slice 'em. The doctors and orderlies? Please, please, die. I even had a list.
Which brings us on to the adults, who are a much more diverse and interesting bunch. This is the film's big structural problem.
Heather Langenkamp and John Saxon are back from the first film, which is nice. Saxon can even act, while his role has got more interesting too. Remember what I was saying about this franchise painting its adults as losers who'll get you killed? Having been a reasonably efficient and well-functioning cop in Part 1, he's now a self-pitying drunk and possibly the best thing in the film. Meanwhile Langenkamp is a mental health professional treating children with sleep disorders, not to mention having 1980s hair and shoulder pads. Clearly she's moonlighting as an extra on Dallas and Dynasty. She's our crossover between the adults and the children, having experienced what the latter are going through but being technically the former.
Then there are the adults who are out-and-out monsters. There's a mother who treats her daughter like a pet dog she mistakenly acquired several years ago. The doctors are blinkered idiots, even the heroic one. They refuse to look beyond their own theories, which admittedly is how most real doctors would have probably reacted in that situation but it still makes them look like retards. This film would have been better and more satisfying had Freddy killed them too. They're so annoying in fact that I'd have preferred the script to have dehumanised them. They could have been iconic presences rather than people, the arbitrary dispensers of life and death. That might have been good. Unfortunately as it is, they're just predictable and stupid characters whom you want to see dead.
There's an orderly who harasses the young female inmates and tries to sell them drugs, but also a nice orderly played by Laurence Fishburne. This franchise has an odd habit of choosing actors for minor roles who'd go on to make it big. The most famous of course is Johnny Depp. This was also Patricia Arquette's first film. She's playing the lead teenager, Kristen Parker.
Oh, and did I mention the nun? There's a nun. Freddy gets some "bastard son of a thousand maniacs" religious backstory which seems pointless but would return a couple of movies later. I actually don't mind it. It's goofy, but it's also a logical way to beat him. Let's face it, there's nothing in this world that could even keep Freddy Krueger quiet, so why not try holy water and crucifixes? So far they've gone for "clap your hands if you don't believe in fairies" (#1, didn't work) and the Power of Love (#2, didn't work). Scarily, this is a step up.
Freddy himself is still thoroughly nasty, although he gets his first groanworthy one-liner. "What's wrong, Joe? Feeling tongue-tied?" Englund tries to underplay the line, but it doesn't work.
He's also no longer tied to that house from the first two films, although he still hangs out there in dreamland. It seems to have taken the place of his old boiler room, in fact, which is a fun idea except for the fact that it doesn't look distinctive. The Amityville mansion had those eye-like windows. This looks like any old house. Despite having watched the first two films only last week I took a while to feel I even recognised it, although later on I did feel familiarity building up.
The production values are the best so far. The effects are mostly admirable, while there's something charming about all that stop-motion animation. The only bad bit is the fight in the junkyard. There are some memorable images, such as Nerd Boy's monster wheelchair and Godzilla Puppetmaster Freddy, but oddly I almost think I'd have preferred fewer effects. Quick, what's the first visual image you think of from the first film? For me, it's the sheep. That's imagination, not technical ingenuity. This film has so many visual bits and pieces that I don't think it makes the most of them. Consider the killer television. That could have been a wonderful set-piece, full of atmosphere and dramatic irony given the identity of the victim, but they throw it away. It's just a cool special effect. They don't take their time and let the wrongness accumulate as the first two films did, creating the kind of atmosphere and imagery that really stays with you.
Random fact #1: the original "Freddy Snake" looked too phallic, which is why they painted it dark green.
Random fact #2: Wes Craven's first idea for this film was to have Freddy Krueger invade the real world, hunting the case and crew of a new Elm Street sequel. New Line weren't interested, but this idea would be realised years later with Wes Craven's New Nightmare (and arguably also in his Scream series).
In the end, I wasn't that impressed. "It's over," says one character who really should have known better... are you kidding me? I liked being surprised by who lived and died, though. Well, slightly surprised. It has the series's first real female nudity, which is nice, but this is also where the formula really took root. Things would get worse, though. It's okay.