It's not that The NeverEnding Story was a perfect movie. Far from it. It's not that nostalgia should prevent anyone from remaking a movie that was good and making it great.
It's just that remakes, generally, aren't good. There are exceptions to every rule, but on the whole, they're just not. It gets worse and worse when people try to remake movies that were iconic for their time period. Like the resurgence of the 1980s in remakes announced lately. Take, for example, Robocop. That is not a great movie. Just to be clear, I freakin' love that movie. But it is not a great movie. It was an attempt to capitalize on the success of Terminator (they even wanted Arnie as Robo but couldn't possibly afford him). It happens to have been incredibly prescient about advertising culture, and successful to boot. But it's still very much an 80s movie to me, not just for look but in terms of outlook.
I have a similar impression of The NeverEnding Story but from a different view. That film, for me, was in good company with the other fantasy movies of that period. There were halflings and crones and crazy ears on the whole lot of them, and that's just how it was. Updating is certainly possible, it just seems kind of pointless since this film will be taken away from that period and left to stand on its own in a current timeline that is, Lord of the Rings notwithstanding, not very friendly to that sort of fantasy. Maybe they'll pull a LOTR on it and more power to them if they do, but LOTR seems to be one of those exceptions, not the standards. The failure of a His Dark Materials cinematic trilogy--based on a series with more cultural penetrance (nowadays) than The NeverEnding Story--should be evidence enough about how hesitant studios are with this matieral. And for it to really succeed, you can't be hesitant.
So I smell failure all over this. Which is a shame because, as I got into in that Tor.com post linked above, I loved the use of muppets in the original. For all that we're inching slowly towards realism in our special effects, physical props are still superior. They have a presence, a physicality to them. I would argue that the impressive T-Rex in Jurassic Park was as much because they actually built a goddamned robot dinosaur as it was because they invented a new special effects technique to reduce the problem of computers providing too much detail. That could have been all CGI. It wasn't, and I think those few scenes with the animatronic creation help sell the other scenes with the CGI dinos. (It helps that dinosaurs, being scaly, are easier to render than fleshy or hairy creatures: please take note, George Lucas.)
I miss muppets. This is making me want to rewatch Farscape again. I tried rewatching with a group, and it was funny to see them not be used to Rygel. I'm so used to assuming he's a character, I don't even half see the muppet. He's Rygel. Muppets offer a range of possible, believable body types--versus the "guy in a suit" sort of aliens common to most sci-fi series. It makes the whole world that much more believable because it's entirely likely that intelligent species would evolve without bipedal symmetry.