'It's what she would have wanted.' Is it hell... Our ignoble obsession with Diana, Princess of Wales

Although she's been dead for 16 years, Princess Diana still holds some pretty strong opinions. On her Twitter feed @DianaInHeaven, maintained by the writer Andy Dawson, she is not afraid to express them vigorously. "James Whitaker is here," she announced, shortly after the stalwart royal correspondent passed away. "That's MY fucking peace shattered." And, when the Sunday People puffed a story on its front page about claims that the SAS were behind the Paris car crash above a lead about "JAWS OFF CORNWALL", she sourly noted: "Pretty fucked off about playing second fiddle to a shark."

This is really as rude a portrayal as I can imagine of Diana: sweary, bad-tempered and deeply self-centred. It is also entirely respectful. Diana, in this rendition, is so transparently and absurdly a figment of the satirist's imagination that to interpret the account as some sort of slight to her memory would be idiotic. At the heart of Dawson's joke is the sanctification of the late princess, a woman we did not know; if we can all collaborate on one fictional version of her, after all, why not present another?

In another ghostly incarnation, Diana has been talking to Naomi Watts, the star of a new film about her relationship with a heart surgeon called Hasnat Khan. Watts had been uncertain about whether to do it – she turned it down twice, in fact, before eventually acquiescing because she "didn't like the idea of anybody else playing the role" – and so, she told The Mail on Sunday last month, "I found myself constantly asking for her permission to carry on … It felt like I was spending a lot of time with her. There was one particular moment when I felt her permission was granted. That won't sound right in print, I know."

Well, if Watts's version of Diana is a rather gentler soul than Dawson's, I fear that she is no less fictional. She is right that her remarks don't sound right in print, but that is principally because they are just totally stupid. (@DianaInHeaven's response, for what it's worth, was "You fucking what?") The actress's séance reflects a strange kind of presumptuous respect that seems to have permeated the approach that she and her colleagues have taken to the movie – not a million miles, I'm afraid, from the way we have collectively treated the princess ever since she died: respect, figured this way, posits a sort of knowledge we could hardly have. All of Watts's interviews about it have taken the same kind of agonised tone, and she and her director Oliver Hirschbiegel (who made the wonderful Downfall) have been at pains to demonstrate that their project is one born of the deepest admiration for a fascinating, noble woman. It is, Watts says, an "important" film to have made.

Its importance, alas, does not seem to have come across to its first audiences. With the amusing exception of the woman from the Daily Express ("a must-see this autumn and will leave audiences in tears"), the critics who saw it last week were unimpressed. "Leaden" and "pedestrian", said The Telegraph; "squirmingly embarrassing", said The Times; "conclusive evidence that the bottom of the royal barrel has been scraped once too often", said the Mail. For The Guardian it was "excruciatingly well-intentioned, reverential and sentimental". Even our own Geoffrey Macnab, who did find some things to praise, lamented its "wild shifts in tone".

These are hard words. Still, you might hope, given that the project was apparently founded on such fawning admiration, that at least those portrayed in the movie would be happy with it. Certainly you would if you had listened to the film's producer, Robert Bernstein, whose explanation of the coded endorsements he had received is scarcely less breathless than Watts's. Asked about Diana's lover, Bernstein said that the writer of the book that provided his source material "met Hasnat two or three times and they got on very well … we're confident there is a tacit acceptance from his family and Hasnat that what we are doing is OK."

As for the Palace, Bernstein actually finds a blessing in still more opaquely communicated messages than those Watts got from beyond the grave. "Certainly the royals are aware of the film and we were allowed to film in front of the Palace, so make of that what you will," he said meaningfully, while conceding they'd not had any "direct contact".

The Queen, as is her wont, has stayed pretty quiet, so Bernstein hasn't any worries of being contradicted by one of his sources, at least. (Neither, come to think of it, has Watts, parody Twitter accounts aside.) He may have expected the same reticence from Mr Khan, who has largely maintained a dignified silence in the past. Unfortunately, this exceptionally discreet man was sufficiently irritated to speak out. "It is a complete lie," he said, and then, lest there be any doubt: "I haven't spoken to anyone involved in that movie. I have never given any approval for it. I have never met or talked or written to Bernstein and I have never given any approval in a direct or indirect manner." He has ignored a series of letters from the filmmakers. At the solitary meeting he did have with the writer, he adds, he told her to leave him alone. If this is acceptance, you would have to say, it uncovers a new and subtle meaning in the word "tacit".

When he was asked about all that, the actor playing Mr Khan, Naveen Andrews, couldn't even muster the nerve to dispute it. "This is someone who really values their privacy," he said, the very soul of compassion. "The sense of being violated in any way, I totally understand. He was absolutely entitled to his opinion." Well, Naveen! It is kind of you to be so totally understanding. But might it be worth clarifying why, if you are so absolutely respectful of his position, you took it upon yourself to pretend to be him in a movie that will be shown around the world? Perhaps you found a secret message hidden in the crossword. Or perhaps – perhaps – all of those protestations of respect are the product of the filmmakers' knowledge that, when they had the chance to make a meaningful show of respect by refusing to be involved, they declined to take it. If you decide to publish someone's diary, it doesn't mean all that much to say how much you like them.

None of this is to say that stories should not be told about real life, and real people. (No journalist could make that argument with a straight face.) But the bar is a little higher when you are portraying a woman who lived a life defined by intrusion, a fact that Naomi Watts acknowledged with her admission that when she found herself in the same restaurant as Prince William she made sure not to look at him.

If you do insist on taking part in such a film, there is only one meaningful defence for doing so, and it is not to say that some of the people involved let you film outside their house. If it's worth it, it's worth it whether or not they like it; it's worth it because you believe that some lives have a resonance and a meaning beyond their ordinary particulars. The right answer for Naveen Andrews to have given would have been that he was sorry that Mr Khan felt violated – but that he thought he was wrong, and he thought that the film was worth the cost.

If you can't say that – well, in that case you run into trouble. If you believe that the only way you can justify your work is by ensuring that it is not too disrespectful of the people it documents, then you are fighting with one arm tied behind your back. And, ironically, you are far more likely to end up with something that diminishes its subjects than you would have if you had tried to paint them warts and all.

Behind the Candelabra, the wonderful recent Liberace biopic, is eye-wateringly honest about its subject; we learn about his amyl nitrate habit, his flippant cruelty, his penis implant. But its meticulous truthfulness is an act of devotion in itself. And no one could leave the cinema disliking its hero. We would all, surely, rather be remembered in glorious Technicolor than in legends of rank hagiography.

Diana, in contrast, is full of inventions, largely because most of the scenes being portrayed supposedly took place between a dead woman and an unco-operative man, with nobody else present. It is perhaps not surprising that the writing (Diana to cardiac surgeon: "So … hearts can't actually be broken?") has been pilloried. It is, furthermore, about exactly the wrong thing. When The Iron Lady came out two years ago, it was generally well received, but to me it seemed like an enormous missed opportunity: tasked with telling the story of one of the most extraordinary British women of the last century, the film chose to dwell on the single thing that made Margaret Thatcher ordinary – her enfeebled, and not especially unusual, old age. A short-lived love affair that ended sadly is, likewise, one of the few stories about Diana that could be told about anyone else. Are we really so insecure that we can only cope with accounts of exceptional lives that claim these people are just like us?

There is a great story to be told about Diana. That is the story of a woman who made a country either less stuffy or more mawkish, and about how difficult that country has found it to let her go; a story about how a not-terribly-bright minor member of the British nobility somehow became a symbol for "ordinariness" and "modernity"; a story that's about her life, but about ours as well. Actually, though, there's a movie a bit like that already. It's called The Queen. Those involved didn't seem to care much about royal approval – in fact, Helen Mirren turned down a Palace dinner invitation – but as it happens, Her Majesty comes out just fine. And if she didn't like it anyway: who cares?