I have been looking forward to this episode, because I was really curious to see how this plays out. I see a tough one here.
Personally, I love this movie. It has lasted with me since the first time I saw it.
I have also experienced the difficulty of trying to turn others onto this movie. Its "gimmick" is difficult to fall into, even if you are a fan of musicals - this is more of a lip-syncacal. (And putting Bernadette Peters into a musical feature without letting her sing is almost an unforgivable sin in itself.) The mix between reality and dream makes things sometimes challenging to follow, and many people want to watch a movie to escape, not to be challenged (I don't understand this, but that is what I am told repeatedly by people I try to get involved in deeper works.) And Steve Martin as our lead actor is the weakest link (he became a much better actor later on - even "Roxanne" Martin would have done better.)
That all said, the filming is fantastic - there is a reason why people love to watch clips of this movie they have never actually seen. And the story is so masterfully constructed. Let's take the whole daydreaming/reality thing. We are introduced to Steve Martin's character as a dreamer. He constantly fades into his dreams, preferring them to reality, so much so that he is an asshole (or sociopath) to everyone who doesn't match up with his dreams. Then he meets Bernadette Peter's character. She becomes someone who shares his dreams, to the point of eventually having her own moments of dreams superseding reality, such as the fantastic Christopher Walked tap scene. His dreams are infectious, and they have become almost a folie à deux.
This leads to the most subtle and brilliant part.
First, Martin is set up to be hanged for a crime he didn't commit. It is interesting, that given all the horrible things he has done, he is judged on the one thing he didn't do. This gives him with his full psychotic break (it is foreshadowed by his recital of lines earlier - the dream is starting to seep into reality). That final song he sings is all about how there must be bad things for there to be good things - he can finally look back at himself and not find himself falling short of his dream's ideals, since for once he was innocent, and this can be the true bad thing that will lead to all his dreams being true. That is why he sings the song himself - there is no reality anymore, his final moments are all him joining his dream world and he can smile at finally reaching his goal. And he dies.
But then we have him in that final scene with Bernadette Peters. It is vital to realize that this is one of those lip-sync songs again, meaning it is a dream. It isn't his dream, since he is dead. It is hers. She has now sunk into her own dream world rather than face reality. So, far from a happy ending, this is the worst of all possible endings. She has become him. The movie has ended no longer as his movie but hers. You could very well make a sequel to this movie that follows her daydreams while she becomes a sociopathic hooker.
So yeah, this is a yes for me. A softer yes than I would like, but Martin's lack of acting depth (at this point in his career) is a huge problem and almost derails the whole thing.