I've seen both versions, and I still vastly prefer the Japanese version. I appreciate the edits and cuts made by the American edit, like improving the pacing, removing poor effects shots, and improving many of the sound effects. Raymond Burr's performance as Steve Martin is actually pretty emotional and solid as well. His closing narration in the American edit is one of the best speeches in the entire Godzilla series.
That being said, the U.S. version has a lot of negative aspects that detract from it as far as I'm concerned. The scenes set in the Pentagon are over-the-top and far too parodic and comical for such a serious movie. It's almost as if the U.S. distributors were making fun of the film. Of course, Raymond Burr remains serious and gives credibility to these scenes, and they're not all bad, but they still contribute nothing to the greater plot aside from scenes featuring American actors to appeal to American audiences.
Godzilla 1985 also heavily downplays the entire Cold War and nuclear holocaust paranoia that made The Return of Godzilla so powerful. Godzilla 1985 demonizes the Russians and portrays the U.S. as a purely benevolent power that only does good things, while the Japanese cut portrayed both nations as at fault to an extent, but also both simply doing what they felt was right in order to protect their people. The best human scene in my opinion of The Return of Godzilla is the scene where the Prime Minister sits in his office and tells his two aides how he dissuaded the American and Soviet ambassadors from using nuclear weapons, by asking them if they'd be willing to use nuclear weapons if Godzilla showed up in Moscow or Washington. Yet, the U.S. version completely cuts out this entire scene.
I prefer The Return of Godzilla to Godzilla 1985, but I realize that the American edit fixed a lot of problems with the Japanese version and added a few positive things. Still, I think it suffered from being "Americanized" in a film that was meant to critique both sides of the Cold War and therefore lost a lot of its emotional and moral impact.
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