There's a lot of stuff that would not fly in a kid's movie today. The Gogans straight up buy an orphan to use as slave labor (although, to be fair, in the remake, BDH steals Pete from hospital and no one says anything). Lampy and Hoagy are drunk for major chunks of the movie. When the Gogans return, the brothers fight over who's going to get to "hold" Nora in the rapiest way possible.
But, ultimately, Elliot is what makes the film work for me. He's fucking adorable, and I felt bad for him every time Pete was a dickhead to him. He's a goddamn dragon that's used to living in the woods; he doesn't know how to mix into society. Don't get mad at him because you put him in a situation designed for him to fail. I really like Elliot, but when he leaves Pete at the end, I was like, "Good. Fuck that kid. I hope the Gogans come back after Elliot is gone."
Also, the whole Paul storyline was REALLY weird. My best guess about it is that they felt the need to explain why Nora was an adult woman in her 30s who lived alone but wasn't some stereotypical spinster. "Look, she's not weird or anything! The love of her life just disappeared and she's holding out for him to come back!" Side note: when they first showed the picture of him in the lighthouse, I had forgotten that he comes back at the end, and for a second, I thought it was a random picture of Burt Reynolds.
I wish they would have dropped that storyline and chosen either the Gogans or Dr Terminus as the villains. Terminus didn't really need the Gogans' help because he already had the whole goddamn town helping to catch Elliot. So it seems weird to have them show up out of nowhere (not to mention what someone else already said about them not even bothering to look at the nearby fishing town for all that time).
I agree with you on these points. Elliot was adorable and I totally prefer this Elliot to the furry CGI one. I could have used more Elliot and less of the side storylines they were trying to include.
The Paul storyline was weird, and I agree they probably felt like they had to justify why she was an attractive unmarried woman living in a lighthouse with her drunk dad.
And yes, they should've stuck with one set of bad guys. Or just leave the Gogan's in the intro like I said earlier to establish a little backstory for Pete and leave Dr. Terminus & Hoagy to be the end bad guys. They didn't need the Gogan's help at all.