Damn, you're right. This bare bones story should have been the plot of film 1. Have the whole town still terrified of Michael even though he's locked up in Smith's Grove. Laurie, ironically, is the only person who has tried to move on, feeling safe because she's married to Michael's arresting officer, Frank, who is now Karen's father. Midway through Michael breaks out and Corey discovers him hiding out. Have the audience think this will be like a passing of the torch movie until the final act when they're like "naw psych, there's only one Michael!" and then they kill Corey. Laurie and Michael have their fight, and both barely make it out alive.

H18 is now film 2, and the one with the four year time jump. Laurie gas now gone full Rambo and turned her home into a fortress because she knows Michael is out there somewhere. The strain has cost her marriage with Frank, and strained her relationship with Karen and her family. Then Kills ends with the town actually managing to overpower Michael, with Laurie delivering the killing blow. And we get our scene of the midnight procession driving his body to the junkyard to crush it.

Damn, we should pitch this to r/fixingmovies.