He expressed interest a number of times in completing a 4 hour cut, but it sounds like one of the issues was that the shooting was done, but there was never post-production work on what would have been 4 hours of a completed movie. So for a proper release they probably would have needed new music, sound effects, and special effects. Lynch apparently pushed for a 3 hour theatrical version, knowing that he wasn’t going to get a 4 hour theatrical version, but it’s not clear how far that went in post-production.

I’ve never seen the 3 hour Alan Smithee version, but I’ve read that it’s missing some FX, for example there are scenes were people should have the blue “spice eyes” and don’t. There are apparently two slightly different cuts of the Smithee, because they reused differently cropped shots in the pan-n-scan version, and then had to re-edit it for the widscreen DVD release. I don’t know if they did any additional fixes to the special effects there or not. I know that that version is supposed to be lacking some scenes from the theatrical version that were cut because the were too violent and the longer cut was made for TV.