Saw it for the first time since I was a kid a couple months ago and was shocked at how well it aged. The dialogue works in layers, too. My wife and I enjoyed it at least as much as our 8-year-old.
I think Last Action Hero is an overall good movie with some flaws.
It takes a little too long to get going, the bit at the front that mostly establishes that his life is kind of dull and he prefers to go to the movies drags a bit. They play the "BECAUSE THIS IS A MOVIE" note a little too often and Slater just outright doesn't believe him for a little too long, he should have started to buy it before they go out into the real world. And the ending kind of just putters out? The bits where it's a send-up of action flicks is really fun and it's worth seeing for that, though I think True Lies is a better loving send-up of action flicks.