Well I wasn't overly fond of the flick when I first saw it, so I wouldn't really factor nostalgia in my appreciation of it in later years. I grew to like it more after watching more anime and tokusatsu shows from that period. As it is, the movie feels like an extended episode of Spectreman, Red Baron, Denjin Zaborger or well... Zone fighter, actually.
Overall, While I certainly wouldn't call it a masterpiece, I wouldn't call it trash either. It's a lot of fun, and I might as well jump on the "I enjoy it more than a lot of later films in the series" bandwagon as well, because I do. Perhaps were I to put on some sort of serious objective critic hat and put the film under a microscope I might feel differently, but I won't. To paraphrase Groucho Marx, 'Godzilla vs. Megalon' is like a frog: if you dissect it, it doesn't work.