Oliver Stone is one of American cinema's most compelling figures. A Vietnam veteran who admits to spending a few years in a drug haze, he has a catalogue of internationally acclaimed features to his name but remains a filmmaker who seriously divides opinion. Pauline Kael famously stated that one of the advantages of retiring from film criticism was that she would never have to watch another Oliver Stone film, and Stone's repeated tinkering with historical fact has earned him a good many detractors. But for just as many he is a director of fierce talent and conviction, as well as being that rarest of modern day beasts – a politically committed filmmaker working within the Hollywood mainstream. Stone's technical skills have been repeatedly demonstrated – the extraordinary editing in JFK and the eye-popping experimentation in Natural Born Killers are just two examples – but it's the passion he brings to his best work is what really marks it out, and nowhere is this more evident than in his blistering third film, Salvador.

Based on a true story, Salvador opens on down-on-his-luck journalist Richard Boyle at somewhere close to rock bottom. He is broke, facing eviction from his run-down apartment, and about to lose his young child and his angry, at-her-wits-end Italian wife. Boyle badly needs a job, but his volatile temper and twitchy unreliability has rendered him almost unemployable. Believing there may be a story down in politically unstable El Salvador, he tricks his pill-popping friend Dr. Rock into accompanying him on what he assures him will be a fun trip, a combination of work and pleasure in a country in which he has political enemies and powerful friends, and a girlfriend and child he has not seen for some time. But El Salvador is a dangerous and unpredictable country, and Boyle quickly finds himself unable to maintain his cheerful cynicism and stay detached from the social upheaval he initially went there to record.

Stone sets up his characters and situation with dazzling economy. In just fifteen minutes of screen time, he introduces us to Boyle and Dr. Rock, establishes the full extent of Boyle's financial, relationship and work-related problems, separates him from his wife, gives us a detailed breakdown of his personality traits and his relationship with Rock, and transports both men to El Salvador and into the belly of an armoured vehicle, convinced that they are to be killed by the local militia. It's a breathless, brilliant opening that invisibly blends drama, comedy, politics and nail-biting tension – despite occurring far too early to present a logical threat to the lead character’ safety, their genuine belief that they are about to die is vividly communicated. This opening also provides a wealth of character detail about Dr. Rock and (especially) Boyle, both of whom I found myself instantly warming to. Both are outsiders, reckless adventurers who embody that wilder side that we tend to keep in check but secretly dream of letting run free. It's this very element that alienated some critics who seem to prefer their heroes more traditional and clean cut – Leonard Maltin memorably complained that the film took its time to engage him because "the two lead characters are such incredible sleazeballs." Conversely, for me that was a key aspect of their appeal.

All of the action is centred around Boyle (the screenplay is based on the real Richard Boyle's autobiography), electrifyingly played here by James Woods, who was up for an Oscar and should really have won it, but lost out to sentimentality – Paul Newman was damned good in The Color of Money, but come on! Woods plays Boyle with the sort of high octane energy that ensures you don't have to warm to him to find him compelling as a character. Self-destructive and self-centred, his gradual conversion to humanitarianism is impeccably handled and utterly believable. There is a burning rage and devastating honesty to Woods' portrayal that for me makes it not only the finest performance of the actor's career to date, but one of the most compelling in modern American cinema.

But he is never isolated here. In only his second major dramatic feature role (after Michael Mann's Thief), James Belushi has never been better, with his memorable comic moments – the sequence in which he spikes a pompous TV journalist's drink with acid is an absolute hoot – balanced by scenes in which he really shows his acting metal. One of my favourites occurs when Boyle returns to the township in which the two have become residents to be confronted by the tortured and murdered body of a young man whose life he earlier tried desperately to save. Dr. Rock is standing with others, even more drunk than usual, and woefully points to where the body is lying, blurting out with an extraordinary blend of anger and anguish, "He's fucked up! Over there, man – he's really fucked up bad!" It's an almost throwaway moment, captured in wide shot, but there's something painfully real about Belushi's delivery and the non-specific nature of the line. It's an authenticity that's carried through to the supporting cast, notably the too-rarely used John Savage as committed Newsweek photographer John Cassady and Michael Murphy as Ambassador Thomas Kelly. Even the smallest roles here have been cast with care.

Stone is dealing with real events here and is clearly doing so through Western eyes rather than those whose lives were directly affected by them. The political upheaval of an entire country inevitably becomes a backdrop for the story of the political and emotional awakening of a troubled outsider, and the story is almost always seen from his perspective. Stone's legendary tinkering with pure fact aside, this leaves the film open to the charge of presenting Central American political events from an North American viewpoint, which itself should set alarm bells ringing. It's thus to Stone's credit that key historical incidents – the assassination of Archbishop Romero, the uncovering of the bodies of a group of murdered nuns – are handled with respect and almost documentary realism, even if the events leading up to them are partially fictionalised to personalise them within the narrative structure. Stone also kicks against present US mainstream expectations by siding with the rebels – the ruling, US-backed right wing government is portrayed as corrupt, immoral and even murderous.

The approach is honourable and often persuasive, but occasionally Stone comes close to overplaying his hand. The true-life rape and murder of a party of American nuns is as horrifying as it should be, but while the yobbish nature of the rapists may well be realistic, the low angle shot of one of them leering and slobbering over his victim pushes them unnecessarily towards caricature. It's almost as if Stone does not trust us to be appalled by the assault alone and feels the need to point out to even the slowest audience member that these are BAD GUYS. The same is true of the sequence in which Major Max selects a loyal member of his staff to assassinate Archbishop Romero, an overly 'performed' scene that strays as far from the naturalism of Woods and Belushi as the film gets.

But these are small blips in an otherwise thunderously effective and immaculately crafted narrative. The film repeatedly plays with our emotions to extraordinary effect, hitting hard when we least expect and at times genuinely frightening. It also carries a still potent political message about misplaced US support for fascistic Central American governments in a way that never feels like a diatribe, partly because it is so well integrated into the character and situation and is delivered with genuine passion and conviction. This is particularly evident in the scene in which Boyle berates the American military representative Colonel Bentley Hyde for his simplistic judgements, ending with this assessment of his own position: "Left wing? Maybe. But I am not a Communist. And that's the trouble with you people, you've never been able to tell the difference!"

Salvador was the first Oliver Stone film I saw (I caught it in London just a week before Platoon opened and transformed the director's career) and it remains my favourite, despite some stiff competition. It stands today, along with Roger Spottiswoode's Under Fire, as one of the very finest examples of 80's US mainstream political cinema. Would that there was someone doing such work today.

My memories of Salvador at the cinema were of an edgy, grainy, low-budget visual style that I was fully prepared to see reproduced on the DVD. I was thus doubly startled by just how GOOD this transfer looks, a view echoed by Stone on the commentary track. Real care has been taken here: the picture is sharp, blacks are solid and colour reproduction is bang-on. A fine job.

A mention should also go to the main menu, which is very nicely designed around 35mm film strips and featuring motion grabs from the film, which are treated with a film wear filter and presented in an eye-catching manner, accompanied by George Delarue's urgent opening theme music.

The soundtrack is solid enough but not one to show off the sound system. Despite the new 5.1 track, the use of rear speakers is mainly limited to music, as so often with supposed remixes of older soundtracks. I should add that this in no way detracts from enjoyment of the film – the documentary-like style is well-matched by the mix, though a more dynamic mix during the action scenes would have added to the already compelling sense of being there.

Though not overloaded with special features, those that are here, for the most part, really do shine.

First up is an audio commentary by director Oliver Stone. There are a few dead patches, but when he does talk he really delivers, giving some fine insight into the film's production, the real-life Richard Boyle on whom Woods' character is based, the facts behind many of the key scenes, and his own strongly held political beliefs. There is some lovely background on how the film was funded using methods that were not always above board, and some nice information about the casting of small roles: Stone's newly born son plays Boyle's child in the opening scene, the cop who arrests Boyle over his outstanding parking tickets is played by top female professional bodybuilder Sue Ann McKean, and small but memorable support roles are handled by the film's stills photographer Gary Farr and first assistant director Ramón Menéndez. Stone is a very knowledgeable and intelligent speaker and a man of considerable passion and commitment, something that really comes through in this commentary,

The documentary, Into the Valley of Death, is an absolute treat and probably the best extra on the disc, as well as being one of the finest of it's sort I have yet seen. Running at 62 minutes and presented non-anamorphic 16:9, it charts the chance birth and troubled production of the film and includes interviews with many of the key participants, including Oliver Stone, James Woods, Richard Boyle and Robert E. White, the real-life US Ambassador to El Salvador of the time and the man Michael Murphy's character is based on. White in particular is invaluable at providing a lot of the factual and political background to the story. There is also some fascinating archive material, including powerful documentary footage of the El Salvadorian civil war, behind-the-scenes and deleted footage from the movie, even the real-life Boyle auditioning to play himself in the film. The information provided is consistently fascinating and drives the documentary forward at the same sort of pace as the film. Possibly the most remarkable aspect of these interviews is how brutally honest many of them are about the problems and personality clashes that more than once nearly brought the production to it's knees – says Stone at one point of his sometimes tempestuous relationship with leading man Woods: "There were times when I wanted to kill him, I mean kill him, really kill him. I never felt the urge to violence as I did in that movie since Vietnam." This is nicely balanced by Woods' own story of how his protestations about checking the chamber of a rifle probably saved his life. A terrific extra that alone almost justifies the disc's 'special edition' status.

The four deleted and extended scenes are interesting, with some giving extra bite to familiar sequences, particularly Boyle's confrontation with a journalist-hating worker in a hotel bar. Others, though, have clearly been dropped for good reason – Major Max's encounter with two American image makers makes a worthwhile political point, but the characters are almost ridiculous parodies and the scene itself as implausible as it would have been out of place. All are 4:3 from what looks and sounds like a VHS linear source.

Finally we have what too often turns out to be huge let-down – the photo gallery. And it's a huge let-down, and for the same reasons as usual – if you're going to include publicity photos, then present them full-screen, not in a tiny little box in the middle. A completely disposable extra.

With US political cinema in the doldrums and shows like 24 and The Agency blindly glamorising the often shifty work of covert American intelligence agencies, Salvador's guts and energy are to be treasured. It's a great film, well presented on a worthy disc. The transfer is very impressive, the commentary, despite the dead spots, is invaluable for anyone interested in the director's work, and the documentary has way more bite than almost all others of its ilk. Highly recommended.