This is film is to action movie cliches what ROCKY HORROR PICTURE SHOW is to sci-fi. LAST ACTION HERO stars the Governator in one of his most fun roles: himself and/or a parody of himself.
The movie begins as tradition kid flick stuffery: a boy with a golden ticket gets literally sucked into a movie starring his favorite action hero, Jack Slater played by none other than Arnold Schwarzenegger. The basic conceit is that the boy is able to predict everything that can happen based on his experience with action film cliches and thus helps Slater out of some sticky situations.
The genuinely amusing dynamic is that Arnold parodying the cliche action hero character which he helped to define is actually playing straight-man to some "crazy" who claims the whole world is a movie. When the boy points to a house and says: "There, that's where the bad guys are!" Slater then goes into a valiant attempt to portray sarcasm as he says "Amazing! Do you know you just completely revolutionized all investigative theory! Years of police work, forensic and psychological training, hours of tedious tracking, when all I had to do was randomly drive around a neighborhood pointing at houses!" Of course the double irony is that in most action films there IS a huge amount of serendipity and deus ex machina built into the proceedings.
Moments like the above are when the film is at its best. Extraneous character developments bog things down and only a few of the actual "gags" are funny (as when all the usual Schwarzenegger roles like the Terminator have been replaced on billboards etc. by Sly Stallone).
The film also gives a fairly interesting take on the role of action cinema in culture. On the one hand, the self-parodying is perhaps of the 80s action film's end times, but it also produces familiar questions like the effect of violence on moviegoers in a unique format.
A must see!