Big Lipped Alligator Moment: The lead pipe wielding Tommy Doyle begins beating the crap out of Michael in a scene involving a near seizure inducing strobe light effect. Tommy hits Michael over and over again, eventually causing some kind of viscous green slime to begin oozing out of Michael's mask. Later, when Michael's mask is found abandoned, it's completely clean, with no weird sludge coating it.
Apparently if you thought it's silly to watch, it was equally silly to shoot. Making of footage reveals a riotous laughing crew as they pummeled the mask and as the green stuff flew out of it.
Complete Monster: In the theatrical cut, Dr. Terrence Wynn is revealed to be as monstrous as Michael himself. Wynn uses the ancient Cult of Thorn as a front for his experiments, using Michael's DNA to create evil in its purest form by impregnating female patients of Smith's Grove Sanitarium with Michael's DNA, most resulting in stillbirths. It is also discovered Wynn helped mentor Michael into being the killer he is today, and helped him escape in the first movie. In the previous movie, Wynn followed Michael in his killing spree, and blew up a police station before abducting Michael's niece Jamie and escaping with Michael. After Jamie successfully births a new baby, Steven, Wynn plans on making Steven the next cycle of evil, and even forms a fascination with Danny Strode, trying to get him to become a killer too.
Contested Sequel: An odd version, seeing how there's two versions that are in contest with each other, much less the other entries in the franchise. Some fans hold the "Producer's Cut" up to be the better one for having a more involved and intricate storyline rather than just being another rehash of the first Halloween, others consider the theatrical cut to be better for its ridiculously over-the-top deaths, and still others consider both versions to be just plain terrible.
Hilarious in Hindsight: A caller on the Barry Sims show has a discussion that ends in Barry mocking the idea of "Michael Myers in Space". A few years later and, while this isn't a Michael Myers movie, Jason Voorhees gets sent into space AND the future in Jason X. Seems someone took the idea of a serial killer in outer space seriously.
Nightmare Fuel: the operating room massacre towards the climax of the film and John Strode's excruciatingly painful death by electrocution.
Dr. Loomis's screaming at the end. Especially in the Producer's Cut. While pretty silly in context, Donald Pleasence's screams are VERY unsettling.
Sequelitis: This film's critical reception is the worst in the entire Halloween franchise, with a mere 6% on Rotten Tomatoes, a huge fall from grace from the original film's 94%. By this point in the series, the story had strayed pretty far from the original film, which was praised for it's simple story and it's slow building of suspense. This film, on the other hand, was criticized for having a very messy, convoluted story, with some calling the finished film incomprehensible (although that's mostly blamed on Executive Meddling). It's no wonder the next film was a partial reboot. However some fans consider Halloween: Resurrection to be the worst in the series, and Halloween 5: The Revenge of Michael Myers not far behind.
Squick: The implication in the producer's cut that Baby Steven is the result of Michael raping Jamie, his young niece.
Even worse, according to George Wilbur, who played the Shape, there was an actual "love scene" [his words, not ours] shot, but that he "kept the mask on." There's a damned good thing this didn't even make it into the Producer's Cut.
Surprisingly Improved Sequel: At least, over the previous film... although that may not being saying much to the fans and some of them even disagree with that sentiment.
The Woobie: Jamie Lloyd as in the last two movies, her baby Steven, Kara and Danny Strode, and Kara's mother Debra. Especially Debra and ESPECIALLY Jamie, who is finally killed off.