Character Rerailment: Cobra Commander actually acts and looks like Cobra Commander in this movie (in the previous film he was more like Dr. Mindbender.) He still sounds like a Darth Vader wannabe, but baby steps.
Cobra Commander is the power hungry leader of the terrorist organisation, Cobra, a group bent on world domination. Escaping from prison after the events of the previous film, abandoning Destro in the process, Commander orders Zartan, disguised as the President of United States, to wipe out the G.I. Joes, resulting in nearly all of their deaths. At a summit of world leaders, Cobra Commander reveals Project Zeus, a Kill Sat that he intends to use to hold the world hostage. As a demonstration of Project Zeus's power, Commander orders Zartan to activate it, destroying London in the process. When the surviving Joes interfere with this plan, Cobra Commander sets Project Zeus to destroy each continent's most highly populated cities to cover his own escape, abandoning his allies in the process.
Zartan, Cobra Commander's right-hand man, is a sadistic Psycho for Hire who gleefully takes part in Cobra's schemes. It's revealed that, when Storm Shadow was a child, Zartan murdered his uncle, framed Storm Shadow for it, and corrupted him into a life of crime, all for no discernible reason. Impersonating the President of United States, whom he regularly tortures for information, Zartan orders Storm Shadow to assassinate the President of Pakistan, sparking a civil war and framing the Joes for it, as part of a plan to free Cobra Commander from prison. On Cobra Commander's orders, Zartan orders an attack on the Joes, killing all but a few of them, and cheerfully tests Project Zeus on London, annihilating the city. In the end, after Storm Shadow turns on Zartan and calls him out for the murder of his uncle, Zartan simply taunts him before trying to kill him.
Contested Sequel: Better actors, no cheap gimmicks, the costumes of Cobra Commander and Snake Eyes were impressive, the effects were really good, all around it made more of an effort to be a GI Joe movie this time around. But while the GI Joe fanbase was pleased, critics deemed it as even worse than G.I. Joe: The Rise of Cobra and casual fans are also divided on if Retaliation is an improvement.
Fridge Logic: So COBRA has infiltrated the US government and used it to wipe out the Joes? Smart plan and all except...Why is the original president still alive? If he's dead, then the world will never know that Zartan was impersonating him because there's no original to discover and save!
Then again, if Zartan's discovered, who better to hold hostage than the Commander-in-Chief?
It's more shown than explained but Cobra requires the real President's (probably alive) retina scan to access the nuclear arsenal.
It's also shown that they're torturing him to get information such as the location of the prison Cobra Commander is being held.
An insane brilliant well-funded criminal mastermind with legions of loyal troops and hi-tech gadgets. Where else are you going to put him except the most secure, top-secret prison ever?
Still good to have one of the best bargaining chips in your corner.
Why was the entire Joe unit (which is supposed to be pretty damn big, very well funded and critical to America's defense (considering from the way the President well Zartan as President anyway, asks for them by name and the cabinet is depending on them) sitting around in the middle of the desert in Pakistan, in the middle of a war-zone for that matter, for one highly sensitive covert job that required one, maybe two, infiltration teams (and probably ex-filtration assistance)? Why didn't they have a base in America where the majority of the Joes were (considering they don't have a base in Egypt anymore and seem to be part of the American military now)? (By the way, why weren't they on high alert in the middle of a war-zone after stealing nukes from the country that they were still inside of?)
It's heavily implied that there were numerous missile warehouses/silos to raid, enough so to require the entire Joe unit to pull off that many missions simultaneously (hence all the dropships shown flying in formation and then breaking off on approach to target, with only one dropship being seen at the warehouse that Duke's team raided); and that the location where the Joe units were destroyed was a joint rally point for the entire team.
Why was Flint stupid enough to leave an American Military division flag on a prison in another country where America shouldn't be, where they were carrying out a covert op that America couldn't be known to be responsible for? And why didn't Flint get court-martialed for disobeying orders on a covert op, risking the lives of his fellow soldiers, and doing something that could get America into politically hot water?
Why would Zartan bother framing Storm Shadow for murder fifteen years (approx.?) prior?
He probably had his own criminal racket going on at the time, or may have been part of MARS by this point and was ordered by McCullen/Destro to sway one of the Hard Master's students toward the path of evil. Storm Shadow, having lost his favored status with the Hard Master after Snake Eyes' arrival, but still possessing greater skill than any of the other youths at the dojo, would have made an ideal candidate.
He's Just Hiding: Any Joe not seen killed on screen during the big massacre who was a character in the original might be presumably still alive, out there somewhere. Candidates include Scarlett, Ripcord, Breaker, and pretty much anyone else still alive at the end of Rise that didn't make it to screen in Retaliation.
Hell, any Cobra killed on-screen thanks to their heavy use of nano-machines, which would be able to heal them.
And thanks to Storm Shadow being alive and well despite his fate in the first movie.
Even Duke's death on screen doesn't stop this reaction.
Inferred Holocaust: To prove just how evil he truly is, Cobra Commander nukes London, one of the most populated and economically important cities on the planet, possibly killing millions and severely hurting the world economy and foreign relations abound in the process. Other than brief scorn from the foreign leaders at the summit, this event never gets brought up again for the rest of the film, with the US president instead congratulates his Joes for saving the day and returning peace to the earth once again at the end.
That said, the backdraft calmed down a little when it emerged that another part of the delay was to add more scenes with Character Development for Duke and Roadblock.
If you think the fans were pissed, imagine Hasbro. The toys had been on the shelves for about two weeks, with more set to ship soon after. They had to take a massive loss by rearranging the shipping schedule. More Avengers and Amazing Spider-Man toys had to be put out to fill up the allotted space on many shelves, and a combination of a product glut and a lack of new products led to a decline in profits in 2012.
Narm: RZA as the Blind Master. The awkward expositioning ruins what would have been some otherwise pretty cool scenes.
Cobra Commander as well. His extremely deep voice renders lines like "I want it ALL." and "We're kicking you out of the band, Destro." hilarious.
One-Scene Wonder: Walton Goggins as the Warden of Cobra Commander and Destro's prison, who utilizes every second of his screentime.
Screwed By The Film Studio: The film was postponed nine months on almost the exact week that the toys went out on the shelves, which (as explained above) in turn screwed up toy shelves for the rest of 2012.