I've got a whole lot of thoughts on this film, but I think I gotta make a disclaimer first - this was my first time seeing this movie, and my first real experience with 1930s musical comedies at all. With that in mind, a lot of my feelings about Footlight Parade might well just be my feelings about the genre as a whole.
With that said - I absolutely loved this film. I thought it was hilarious, entertaining, visually stunning and more than emotionally satisfying. But more than just being a good film, I think it would be a fine entry to the canon, for the following reasons:
1) The three big prologue performances are, need I say again, stunning. They are pure art. The entire synchronized swimming segment, with the spinning concentric wheels of bodies melting away into those mesmerizing snake-shapes, deserves to be framed and displayed in an art gallery. The long-take bar shot in the Shanghai Lil performance was fabulous camerawork. The more abstract elements, like the Flipbook that closes the final performance, or the mail-collage representing the marriage ceremony in Honeymoon Hotel, were all equally creative. I think on these visuals alone the film deserves a place in the Canon.
But more than that...
2) I think a lot of people might feel something to the effect of "I would gladly vote yes, if the film was just the last half-hour, but the whole plot before that really drags it down". Well, at the risk of tilting at windmills, I'd say they're dead wrong. I think the main body of the film before the final set pieces are not only charming and hilarious - Frank McHugh as the dance director had me laughing throughout, and by god those zingers from Nan the Secretary - but valuable for a more historical reason. Like Amy said, its hard not to see the past in the stiff, chaste, black and white way its presented in movies once the Code took effect. This film is a great upset to that impression. I kept finding myself thinking, gosh this is all so modern - by which, of course, I should mean real. That sense of raciness, of Nan rushing to put on her tights, of the moral man caught being a little handsy with Miss B Rich, all these little jokes and moments that made me think "Surely they couldn't do that back then!" are a reminder that yes they surely could, when they were allowed to, because these films were made by people just the same as modern filmakers, or the storytellers and playwrites long before them.
That all said, the Racism is... surely troubling. It frankly made me uncomfortable, and I say that as a white man. If that takes away anybody's enjoyment of this film, I wouldn't dare fault them one bit for it. But not to rely on that "product of its era" arguement - we still enshrine the Illiad, the plot of which is sparked by sexual slavery, or heck even Birth of a Nation (1915) despite its appalling depiction of the KKK. I think the film still deserves to be Canonized in spite of these unsavory aspects. It might make the film less enjoyable, but it doesn't make it any less deserving of the Canon. And heck, if part of the Canon's purpose is cataloging and preserving types of film as they were, this uncomfortable use or Race and cultural appropriation is representative of films of this era.