After the dismal A Nightmare on Elm Street 2: Freddy's Revenge, Wes Craven came back as the screenwriter and actors Heather Langenkamp and John Saxon were brought in to reprise their roles from the original film. With that, and some great new talent - including a young Lawrence Fishburne and a young Patricia Arquette, and an even bigger special effects budget, A Nightmare on Elm Street 3: Dream Warriors almost reaches the level of the original. In fact, were it not for a relapse back to the 'Freddy can do whatever he wants in the real world as well as the dream world' in the finale of the film, it might well have exceeded the original.
The timeline is a little weird, given that the remaining Elm Street kids seem pretty young for this now being 10 years since the original, but it still falls within the realm of possibility. Anyway, these remaining teens are all institutionalized for their nightmares, and are being slowly killed off one-by-one, until help arrives in the form of Nancy Thompson from the first film, now a sleep therapist.
The film continues in the vein of the first film, tapping into the basic conflict between the Boomer generation's anything-is-better-than-nothing interventional approach to things, and Generation X's stalwart mind-your-own-business attitude. With the latter group having to pay for the 'sins of the father' and the former keeping dark secrets from their offspring to maintain the veneer of suburban paradise. It's no wonder this resonated so well with 80s teens.
Even if one had never seen the original, this film could probably stand on it's own, and the additional depth Craven gives to Kruger's background keeps it from seeming like a retread for those who have seen the previous films. Is it dated? Yes. Especially thanks to an incredibly cheesy Dokken soundtrack - but who really expects to watch this without a certain amount of kitchy retro. There's even some long overdue humor injected into the proceedings. Be sure to watch for Dick Cavett and Zsa Zsa Gabor in cameos, as well as a brief appearance by Robert Englund sans Kruger makeup in the first reel.