I don't get what's so great about the decapitation scene.
It was just a robot, so it's not like it was anything particularly graphic or hardcore. Furthermore, it lessened Shredder's character in more ways than one.
First off, Shredder should never be in a position for Leonard to be able to "kill" him. At least, not until the end when they're ready to do away with Shredder as the main antagonist. Shredder's supposed to be more talented than the Turtles, so why should Leonard be able to dish out that "fatal" blow in mid-series?
Secondly, the concept of Shredder as an alien in a robot body completely undermines the entire character. He's no longer a talented fighter, he's a pilot. Granted, it still takes skill to do what he does, but it's not the same as training with your hands and your feet. It's more like playing a video game. Shredder gives the command and the mechanical body carries out the order. Even if training is required, it's far less impressive than if it were physically him doing it. It's all fine and dandy for Krang to let the suit do the work, but Shredder should be a human who does his own fighting.