Princess Diana, Arnold Schwarzenegger, and Robert Palmer made headlines this week

By Benjamin Svetkey
Updated November 27, 1992 at 05:00 AM EST

CUT: Watching the BBC’s royal family documentary on PBS, Elizabeth R, you’d never know that Princess Diana is an AIDS activist. Scenes showing her wearing an AmFAR T-shirt and a red ribbon were cut from the film. The BBC blames ”technical reasons” like bad lighting; others speculate that the scenes were dropped because the British lose their cool whenever Di ”gets political.”…

DETONATING: Arnold Schwarzenegger is helping rebuild L.A.’s downtown — sort of. The houses his crews are building are sets for his next film, The Last Action Hero. Unfortunately, Ah-nuld will be blowing them up shortly….

CASTING: Al Pacino is rumored to be top choice for the lead role in the movie version of Martin Cruz Smith’s best-seller, Red Square, a sequel to the 1983 thriller Gorky Park, which starred William Hurt…. Drew Barrymore, who knows from trouble, will star as Amy Fisher, Long Island’s ”Lethal Lolita,” in an ABC TV movie that starts shooting soon…. Andrew Dice Clay will play an undercover cop in a new ABC series, Bangers. One of its producers calls Clay ”a great dramatic actor (with) great potential.”…

PENDING: Kit Culkin, the career-managing dad behind the $5 million kid, Macaulay, is at odds with Twentieth Century Fox again. After using his son’s Home Alone success as leverage to get Mac the starring role in Fox’s The Good Son, Kit, say sources, has been pressuring the studio into casting Macaulay’s 8-year-old sister, Quinn, in Son. But director Joseph Ruben (Sleeping With the Enemy) reportedly picked an unknown 5-year-old girl instead. At press time, Fox executives were denying reports that the production, which was scheduled to start this week, could be shut down, but one admitted: ”The situation is volatile. It changes every 24 hours.”….

SEPARATING: Reports that rocker Robert Palmer and his wife, Susan, are splitting after 22 years of marriage have been confirmed. Put the ”Addicted to Love” jokes on hold….

SUING: George Michael is asking a London court to grant him freedom from his contract with Sony, which bought out his former label, CBS Records. The MTV crooner is arguing that the pact (good until the year 2003) is so onerous it ( constitutes restraint of trade. If Michael wins, the precedent could allow other bands to break from acquiring companies, doing to the music industry what free agency did for baseball.

Reporting by Alan Carter, Terry Murphy, Anne Thompson, and Steve Chagollan