I ran across this several years ago while channel surfing on a Sunday afternoon. Though it was obviously a cheesy TV movie from the 70s, the direction and score were well done enough that it grabbed my attention, and indeed I was hooked and had to watch it through to the end. I recently got the opportunity to buy a foreign DVD of this film (oops, didn't notice a domestic one had finally come out a couple months prior), and was very pleased to be able to watch it again (and in its entirety).
I don't wholly understand the phenomenon, but somehow the 70s seem to have a lock on horror movies that are actually scary. The decades prior to the 70s produced some beautifully shot films and the bulk of our enduring horror icons, but are they actually scary? No, not very. Likewise in the years since the 70s we've gotten horror movies that are cooler, more exciting, have much better production values and sophisticated special effects, are more fun, funnier, have effective "jump" moments, and some very creative uses of gore, but again... they aren't really scary! There's just something about the atmosphere of the 70s horror films. The grainy film quality. The spookily dark scenes unilluminated by vast high-tech lighting rigs. The "edge of dreamland" muted quality of the dialogue and the weird and stridently EQ'd scores. The odd sense of unease and ugliness permeating everything. Everything that works to undermine most movies of the 70s, in the case of horror, works in its favor.
Specifically, in this film, the quiet, intense shots of the devil dog staring people down is fairly unnerving. So much more effective than if they had gone the more obvious route of having the dog be growling, slavering, and overtly hostile ("Cujo"?). The filmmakers wisely save that for when the dog appears in its full-on supernatural form. The effects when that occurs, while unsophisticated by today's standards, literally gave me chills. The bizarre, vaguely-defined, "I'm not quite sure what I'm looking at" look intuitively strikes me as more like how a real supernatural vision would be, rather than the hyper-real, crystal clear optical printer / digital compositor confections of latter-day horror films.
While the human characters in this film are not as satisfyingly rendered as their nemesis or the world they inhabit, the actors all do a decent job. The pairing of the brother and sister from the "Witch Mountain" movies as, yes, brother and sister, is a rather cheesy bit of stunt casting, but they do fine. Yvette Mimieux always manages to be entertaining if unspectacular. Richard Crenna earns more and more empathy from the audience as the film progresses. His self-doubt as he wonders whether his family's alienness is truly due to a supernatural plot or whether he's merely succumbing to paranoid schizophrenia is pretty well handled, though his thought that getting a routine physical may provide an explanation for what he's been experiencing is absurd in its naïveté.
The movie's The-End-Question-Mark type ending is one of the only ones I've seen that doesn't feel like a cheap gimmick, and actually made me think about the choices these characters would be faced with next and what they'd be likely to do and how they'd feel about it.
Detractors of this film may say it's merely a feature-length vehicle for some neato glowing retina shots, but hey, you could say the same thing about "Blade Runner". :-)

If I had realized John Wayne was in this movie, I would not have watched it. It's demeaning to the Japanese, unfortunate for Hollywood and embarrassing to any thinking person. But then, most John Wayne movies are like that. Hollywood in the fifties still believed that everybody in the world loved Americans when the truth was (and still is) somewhat different. The movie deals with the nineteenth century isolationism of Japan. Maybe it's Hollywood that should be isolated.To put it as succinctly as possible, this film is appalling jingoistic claptrap.(Sort of a Madama Butterfly with bad music.)