As much as I love ALIEN I agree to a certain degree with Terry Gilliam on most of his points concerning ALIEN. Giving a full-body shot of the Alien did indeed break the spell, which in its turn made the creature less menacing and threatening, especially since you could tell that it was a man in a suit due to the limitations of creature effects back then. I also agree that having Ripley go out on a limb to save Jones seemed silly considering the circumstances, but since those scenes were executed so well tension-wise, atmosphere-wise and pace-wise, it never strikes me as silly while actually watching it (i.e. Ripley going risking everything for a cat) - it's only in retrospect it seems Hollywood silly.
Ripley stripping down is very symbolical. She thinks she is out of harms way and safe and thus lowers her guard, finally allowing herself to be vulnerable and relax only to realize that she is stuck in the belly of the beast. Her crawling into the spacesuit while essentially praying (manically whisper-singing "Lucky Star" repeatedly) is interesting as she is now an official survivor of the beast, effectively hardened, this time quicker to put on her armor and arm herself yet realizing that only luck (i.e. the right timing) and a fools hope (determination and instinct) is what is going to save her in the end. On the other hand having a young sweaty female strip down to her undies in a horror movie might seem very cliche, hackish and cheap to a lot of people...
But when it comes to simplifying ALIEN as nothing but a glorified ghost train movie I think it is kind of a dismissive and unfair assessment, especially since Scott's intention all along was to make a B-movie with A-list acting, pacing, photo, sound, ingenuity, special effects, themes/symbolism, score etc. Despite ALIEN's flaws I think that Terry Gilliam went too far in his criticism of the movie and I strongly doubt that he would've been able to make a better sic-fi monster movie than ALIEN. I'm not saying that because I don't like him or his movies (on the contrary - I really like them!), I'm saying that because his eye, style and liberal use of humor doesn't sit well with the cold somberness of ALIEN and A3 (as well as ALIENS to a certain degree). I think that he would've been even less a fitting pick than Jeunet (another director that is a little bit too fond of humor to direct an Alien movie).