I think it is one of the most interesting scenes in the film, and perhaps in all of Woody Allen's screenplays. It is the one time in a Woody Allen script that the neurotic character that Woody plays to such perfection actually undergoes a transition and becomes de-neuroticized (my construction).
Mickey (Woody) has undergone a personal epiphany because of the medical "scare" he has experienced. Mickey, now living life one day at a time (paralleling the AA references from Lee's character) would, of course, now be motivated to go into the record store to greet Holly. Had he not undergone such a change he would likely have passed that opportunity by with the attitude "there's that crazy sister of my former wife."
Of course they know each other, but they both engage in a playful, flirtatious reunion. It is an absolutely shimmering scene that tells us so much about human growth. As the tale tumbles to its conclusion we learn that they marry and in the final moment discover that Mickey, once diagnosed as sterile, has fathered a baby. Somewhere in the IMDB notes it suggests the ending was made more "upbeat" at the suggestion of the studio. I wonder if that is the case or if Woody Allen was just writing under Cupid's sway. At heart Woody Allen is a dedicated romantic.
Just listen to the score!
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