To the best of my knowledge this is one of, if not the first, "meta" horror films to exist. Set in the "real world" the actors and individuals related to the Nightmare on Elm Street series play themselves. There are a few exceptions such as the kid from Pet Cemetery playing Dylan (Heather's fake son) and of course Robert Englund reprising Freddy (although the credits say Freddy was played by Freddy Krueger) but overall the border between reality and film are blurred. So much so that Wes Craven actually included the Heather stalker in the film which was an existing real life event Heather was dealing with at the time and gave him permission to include.
The premise of New Nightmare is similar to previous installments in the sense that film Wes states that all of the energy and fandom surrounding Freddy has caused him to manifest as an actual entity. The films kept him going and that it's been so long since he's had that attention and focus he has come back to attack the original people involved. Heather has tons of nightmares and signs of Freddy, Dylan is slowly becoming possessed by Freddy, Wes is haunted by nightmares which cause him to start a new script, and Robert's random beach scene paintings are forgotten for him to paint an awesome Freddy with souls painting. Seriously, I want a print of that in my home. I'd hang it right over the bed. Not on the wall, but on the ceiling. That's hot, right? My fiancé isn't here to say otherwise, so it officially is.
We're also treated to a redesign on Freddy himself. Personally, I'm in the middle of the road with how he looks in this. The new biomech claw hand is a nice touch, but the head piece isn't as scary as the burned and melted face. They bring back some of his more interesting moments too like the tongue in the phone and the elongated arms but I'm still middle of the road with him here.
This was actually the last Nightmare on Elm Street film with Robert, and the next to last time he would play Freddy. Freddy vs. Jason actually takes the credit for the final Robert-as-Freddy moment... goin' out with a bang there, eh buddy? For real though, I love Robert Englund. So much so I own Dance of the Dead just because he was on the cover of it.
I only have one real criticism of this film and that would be the sound effects. They continually use the same stock "pot breaking" noise for everything from plates falling of the wall in an earthquake to a statue breaking in a cemetery. Also, when Heather and Dylan are escaping Freddy's nightmare realm there is what I can only describe as a "chamber of farts" sound while they fly through the sky.
Overall, I give New Nightmare 3 Elm St. signs out of 5:
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