Some good comments in my previous post, both in terms of correcting me (it was wrong to talk as if Hitchcock was more leery of location shooting than most directors) and in terms of raising an important issue: should an obviously fake special effect or process shot in an old movie always be considered a flaw?
One commenter pointed me to this article by Chris Fujiwara, where he criticizes Mystery Science Theater 3000 and the whole culture of mocking old movies for "flaws" like lack of realism or naturalism. I'm not an MST3K fan so I'm sympathetic to most of his argument, though I will point out that he kind of misses the point by dismissing the "plot" of the show: fans of MST3K will tell you that they watched to get involved with the characters, and the fun was not just hearing the snarky comments but watching three familiar characters interact. (I personally don't find that aspect of the show interesting enough to make up for all the cheap shots, but I'm not arguing with those who do.)
But his point is a good one: there's a tendency to think that a movie is "bad" if it doesn't conform to a very narrow, fake-realistic definition of good acting, good effects, or good set design. And the problem has gotten worse in the years since he wrote the article. An easy way to get noticed on the internet is to point out some logic hole or minor continuity error in a movie, and I see more and more people not just pointing these out (which is fine) but discussing them as if they actually matter. An example would be Back to the Future writer-producer Bob Gale's list of "plot holes" in No Country For Old Men. Most of these "holes" sound like notes that no sensible director should take, yet it's clear that movies today do in fact spend way too much time finding answers to stupid questions or finding "logical" reasons for plot-fueling coincidences. Why do you think most movies today are too long? Because they waste inordinate time on answering questions that won't even be brought up by anyone who actually enjoys the movie.
And so it goes with special effects: just because a model shot or a piece of rear-projection does not look realistic does not make it bad, and we shouldn't fall into the trap of making fun of an effect the way some viewers now make fun of a stylized bit of acting.
That said, there's a danger of going the other way and assuming that there is no such thing as a bad special effect in a good movie, that it's all part of the plan. (We all have a tendency to assume that everything went right in a good movie and everything went wrong in a bad one; critics will sometimes find a jusification for the worst bit of John Ford comedy relief if it happens to occur in one of his great films.) But while the terrible special effect at the beginning of The Seventh Seal doesn't hurt the movie, and may help us understand what kind of a movie it's going to be, that doesn't mean it's a good effect. And it certainly doesn't mean it's what Bergman would have had in the movie if he'd had more money to work with.
And by not criticizing bad special effects in old movies, we lose the ability to praise good ones. There are some outstanding special effects in '30s and '40s movies, as shown in Bringing Up Baby and Citizen Kane and The Devil and Daniel Webster and other movies where the effects are so good that I haven't even noticed them (and therefore can't praise them). A tendency, weirdly shared by an equal number of classic movie fans and classic movie haters, is to assume that no special effects in old movies were of a high technical standard. That's not true at all.
Finally, I think it's important to distinguish between special effects that are bad and those that are recognizably fake. Sometimes an effect may be obviously artificial, and yet it clearly works because the whole movie is going for an artificial look, and a realistic, un-noticeable effect would be wrong. A lot of the effects in, say, Powell and Pressburger movies are like that. I don't think the model village in Lady Vanishes fits into this category because the movie is otherwise trying to be fairly naturalistic in its setting (it's set in a world of very recognizable 1938 English types in an ordinary setting). A lot of the bad effects in Hitchcock movies stick out precisely because he's trying to create suspense by putting fantastic/horrifying things into realistic settings -- and sometimes real locations -- and so the moments of obvious fakery just seem like they break the mood he's trying to create.
But I appreciate that if you see the movie a different way, it might look different; if you see The Lady Vanishes as moving from an indeterminate, fantasy village to a semi-realistic train setting (or to put it another way, from Ruritanian fantasy to the reality of a Europe on the verge of war), then the opening shot would work. I don't see the film that way, so it doesn't work for me. But it all comes back to the point that whether an effect "works" or not depends on its place in the film as a whole.