Having just watched this for the first time in 2018, I wonder if Arnold Schwarzenegger had intended for this to be a sort of retirement movie. It very much has that vibe, and would have worked spectacularly to that end in a fun, meta, kind of way. But for better (Maggie) or worse (Terminator 3) Arnie just keeps on sluggin' and that's the world we live in.
So instead of that, I guess Last Action Hero is really just a deconstruction of the over the top action movies the 80s and early 90s did with such aplomb. Is it a scathing criticism of them, or a love letter to them? I don't know, but Last Action Hero works for me, and that's all I'm taking away from it.