It's not hard to argue that the entire sequence leading up to Schneider's death was a shared dream created by Freddy, possibly with some sleep-walking involved to get the participants to the gym showers at the end. The entire sequence does play out like a sexual fantasy between two closeted gay men: the younger goes to a gay bar, where his coach is waiting to "punish" him for underaged drinking. This interpretation changes Schneider from a predator to a gay man who sometimes fantasizes about younger men. It also makes his death far more horrifying, as you realize that he likely believed he was being punished for his sexual desires.
Is Jessie gay? Or is he someone with deep rooted psycho-sexual issues as a result of his tumultuous relationship with his father? His running away from making out with Lisa could alternately be interpreted as him being afraid of intimacy due to associating sex with violence.
Awesome Music: Christopher Young's score is one of the eeriest themes in the Elm Street franchise.
Base-Breaking Character: Lisa Webber. Initially, she was The Scrappy purely for her association with the film, but recent years have turned her into a far more divisive character. Some franchise fans feel that, despite this film's flaws, Lisa stands out as a likeable and tough Final Girl who defeats Freddy. On the other hand, quite a few fans dislike Lisa for her clumsy involvement with the Homoerotic Subtext and, in particular, taking the co-lead role from Grady, who most fans would agree had a closer relationship with Jesse and who definitely fits in better with the previously mentioned subtext. Really, whether or not one likes her comes down to what one thinks about the incredibly divisive Homoerotic Subtext. If the person liked it, they'll probably dislike Lisa. If they disliked it, she'll be seen as a saving grace of the movie.
Contested Sequel: Widely considered to have a dip in quality, though it has its defenders. Its canon status even reaches Broad Strokes (as the events are hardly referenced in sequels, but some elements remained).
Ho Yay: Whatever the people may think of the movie, it's definitely the most homoerotic Elm Street film to date, and one of the gayest horror movies ever made.
In the Nightmare documentary Never Sleep Again, the subject is talked about at length. It reveals that the writer actually did it on purpose, but not even the producer realized it until it was too late. Robert Englund has gone on record saying that he thinks that Freddy in this film represents Jesse's repressed homosexual desires. Mark Patton (who played Jesse) came out as gay after the film was released, and thinks that his self-doubts about his sexuality at the time the movie was shot carried over into his performance. A lot of other people have commented on it, too:
Lisa's dad attempts to shoot Freddy and misses. Freddy turns towards him and the audience is given a terrifying closeup on his enraged face. But then Lisa arrives at her father's side, and the closeup shows Freddy going completely puppy-eyed.
Freddy causing a lovebird to attack the characters and then explode was among the silliest scenes in the series. Made even worse if one makes a connection to another film about attacking, exploding birds.
Averted with Grady's death. Trapped in his room with Freddy slowly closing for the kill, he starts screaming for his father to come and help. Similar to Glen's death in the original, as he dies screaming for his mother, it reminds viewers that, Dawson Casting aside, in this universe, these are teenage children that Freddy is preying on.
Signature Scene: Even the film's detractors generally tend to admit that Ron's death scene is one of the best kills (arguably even the best) in the entire franchise, thanks to the Visual Effects of Awesome as Freddy erupts from Jesse's body, which is followed by the simple-but-terrifying scenario of being locked in the room with a slowly-advancing Freddy.
Sophomore Slump: While it's not generally regarded as the worst film in the series (Freddy's Dead: The Final Nightmare and the remake are widely regarded as being far worse, and a fair few also consider the fourth and fifth films to be worse), it's still considered noticeably weaker than the films either side of it. While the Homoerotic Subtext is now often seen as a strength of the film rather than something to be mocked, criticisms remain about this film's tenuous connection to the first, Jesse not being a particularly effective or interesting protagonist without reaching into said subtext, the silly nature of Coach Schneider's death, some of the film's other Jump Scare moments, and the climatic party massacre feeling more like something from a Halloween or Friday the 13th film.
In fact, a premise not dissimilar to that which Chaskin actually used would flow logically from the conclusion of A Nightmare on Elm Street. Assume that Nancy’s climactic confrontation with the dream killer, while not destroying him, had robbed him of so much of his power that he is no longer able to do anything more than show up in some kid’s dreams and scare the crap out of him. Assume further that Jesse Walsh is especially vulnerable to Krueger’s subconscious intrusions because the stresses of his home life, the move, and the confusion about his sexuality which Chaskin hints at repeatedly (but backs off from every time) have left him psychologically and emotionally exhausted. A weakened Krueger might still have the strength to force a sleepwalking Jesse to act as his surrogate, provided that he concentrated on victims whom the boy already had reason to hate. This is almost the premise behind Freddy’s Revenge, but Chaskin and director Jack Sholder clutter it up with so much extraneous crap that the central thread gets lost amid a welter of “hey, wouldn’t it be cool if we did this?” moments. For example, Krueger now can apparently cause toasters, tennis rackets, and parakeets to spontaneously combust, and has the power to create little pockets of dream reality around himself when he’s using Jesse’s body. These are totally new abilities, far in excess of anything he could do last time around, and his possession of such skills would seem to undercut the rationale behind his “partnership” with Jesse entirely. Then there are the awkward facts that Jesse physically transforms into the killer’s likeness whenever Krueger takes control of him, and that the boy doesn’t even need to be asleep for Freddy to exert that control. Simply put, none of this makes any kind of sense, and it was obviously written into the screenplay solely to provide excuses for big, attention-getting special effects set-pieces. What’s more, by including them, Chaskin and Sholder efface all of the benefits they stood to gain by dragging the story even further away from the standard slasher formula.