In the opening shots of John Guare and Louis Malle's remarkable film "Atlantic City," we watch ghostly old beach hotels, the repositories of gilded, early 20th-century American dreams, collapse under the wreckers' ball. "Lydie Breeze," the Guare-Malle theatrical collaboration that opened at the American Place last night, is set in another crumbling beach town of another era—hurricane-gutted Nantucket in 1895—but it is about the same dreams, the same ghosts, the same kind of metaphorical wreckage.

"Lydie Breeze" is not, however, an achievement of the same high order of "Atlantic City." Like Mr. Guare's other recent plays—notably "Landscape of the Body" and "Bosoms and Neglect"—his new one is a literate, ambitious experiment in which luminous and savage theatrical bits float within a murky, incorporeal whole.

The word "literate" cuts both ways in describing this play. On one hand, Mr. Guare has written some characteristically transporting speeches...