This has always been one of my favourite episodes of the first season, right from my first viewing of it when it first aired. Subsequent viewings have only cemented this like in my mind and also makes it apparent that it is one of few truly better written and developed episodes of season one.
As is mentioned in other reviews, this is the first episode to feature the commonly used holodeck malfuntion plot device and as a result it comes off as fresh and interesting right from the start. It is also the first episode in which we really get to see for the first time what the holodeck is capable of creating for the in-show characters. Of course we as the audience know that everything 1930s that we see is just a set with a digital portal doorway, but if you allow yourself to be absorbed into the show and what it is trying to propose, then you can see the amazement of the characters to what they are seeing (classic cars, buildings, geography etc) as justified as the recreation of the `world` by the holodeck is a true feat of technological mastery. When we again step back and return to a critical audience member, we are also for the first time tickled by the potential storylines and future mishaps that could take place when the holodeck is used as a plot and story element.
Plot development through technology aside, we are also treated to supurb writing and a story that keeps the viewers attention firmly fixed on the screen. The acting of the cast makes you truly believe that the characters of Picard, Data and Beverly are all actually fascinated by and want to take part in a recreation of a period based story. You can especially see this when Picard recounts his initial voyage into Dix`s office to the bridge crew in the conference room; he is like a kid describing his first time playing a particular game or reading a particualr book. It is also apparent in his eagerness to return to the simulation appropriately dressed for the time period. The story itself; particulairly the final showdown in Dix`s office where the crew member is shot, is suspenseful in it`s development and satisfying in it`s conclusion. The fact of a holo-character becoming slighly aware of his true exsitence and the existence of another reality hints at events and issues that will surface in later episodes.
A definite highlight of the episode is Gates McFadden done up in 1930s era clothing and mimicing the use and application of makeup in the police station. Hard to imagine that we would be losing her for season two!
Biggest drag on the episode is the subplot storyline of the contact between the Federation and the insect race. The insistence on the proper pronounciation of their dialect and the extremes to which they are supposed to take it is just plain annoying. Better left forgotten.