ROME -- As if following a script, the 62nd annual Venice International Film Festival, set to begin Aug. 31 and conclude Sept. 10, figures to have many intriguing subplots. Speculation about the artistic director's future, question marks surrounding political backing for the €100 million ($122.7 million) cash injection needed to build a new Palazzo del Cinema and growing perception that the festival relies too heavily on Hollywood content are only a few of the story lines being eyed by attendees preparing to jet into the Lido.

As if that weren't enough, organizers eager to avoid a repeat of the problems that plagued last year's Venice festival also must contend with heightened security concerns following the July 7 London terrorist bombings amid speculation that Italy is next on the list of potential target nations.

"Luckily for us, the water by the Lido is too shallow to let a submarine in," seemingly unfazed fest director Marco Muller says with a laugh.

Contrary to what many observers might expect, a feisty Muller seems emboldened by this year's Venice film lineup and by the prospect of having a go at naysayers.

"I am quite happy that our competition can confirm the importance of a number of directors that have been singled out for their important second debuts," he says. "Venice can become the place for confirming the importance of seven new directors that are now becoming, for everybody, the most important contemporary directors."

Slimmed down from 76 last year, a lineup of 54 films in three major sections (Competition, Out of Competition and Venice Horizons) still boasts healthy components of Asian, Italian and, of course, star-studded Hollywood fare. Including John Madden's U.S.-U.K. production (and upcoming Miramax release) "Proof" and Abel Ferrara's U.S.-Italian co-production "Mary," 13 American films are set to screen in Venice this year -- eight fewer than in 2004, but still proportionally impressive. Italy enjoys the second-largest representation with 10 films (including three in competition), France has seven titles set to screen, and China, Japan and South Korea claim a combined six films in the three major sections.

The reduction in film volume is expected to increase turnaround time between screenings and create fewer delays, problems that have plagued the festival in years past. In addition, only five movies will unspool daily in the three major sections, all competition screenings will take place in the Sala Grande, premieres involving Hollywood stars will be staggered, and ticketing has been outsourced to a new company.

"We analyzed all of the things that went wrong last year and set up an entirely new structure," Biennale president Davide Croff says.

Because of its troop support to the ongoing conflict in Iraq, Italy has been on high alert for an attack on its soil following the recent London bombings. During the past month, Italian security agencies have conducted several sweeps of suspected Islamic militants in Rome and Milan.

"We have to take this into account, even if we don't see specific warnings to our exhibition," says Croff, adding that festivalgoers should prepare for metal detectors, bag checks and a bag-free "green zone."

Last year, even without the specter of specific terror threats, the festival's organizational problems reached a comic crescendo when then-Miramax co-chief Harvey Weinstein, after waiting a bit too long for the premiere of "Finding Neverland," joked that he was sizing up Muller for concrete shoes for a swim in Venice's canals.

"After that, everybody said, 'Marco is never going to let another Miramax film into Venice,'" Muller says. "How many Miramax films do we have this year? Three ("Proof," Terry Gilliam's "The Brothers Grimm" and "Cinderella Man")! More than last year."

Be that as it may, organizers admit readily that Venice still trails the Toronto International Film Festival and the Festival de Cannes marketwise. Amid increased competition between festivals and markets -- best exemplified recently by the American Film Market's aggressive takeover of MIFED's fall slot -- and ever-more emphasis on festivals that include markets, some observers believe that Venice's stalwart support for American fare threatens to turn the event into a $10 million press junket.

"We are not going to Venice en masse this year because it has just become a big launchpad for U.S. titles, with a smattering of secondary Italian films for political reasons," says one high-level international buyer who requested anonymity.

While maintaining a positive opinion of the festival, Pathe Pictures managing director Francois Ivernel echoes that sentiment.

"I think Marco is doing a very good job, but the strong accent put on big American films shouldn't get in the way of quality European films," he says. "It is not yet a problem, but it is definitely something to keep in mind."

High-profile Venice-bound films include Ang Lee's "Brokeback Mountain," starring Heath Ledger and Jake Gyllenhaal, and Fernando Meirelles' "The Constant Gardener," starring Ralph Fiennes and Rachel Weisz. Both are upcoming Focus Features releases that will unspool in competition.

Also competing for the Golden Lion are Warner Independent Pictures' "Good Night, and Good Luck," a 1950s-set drama directed by George Clooney that depicts the events surrounding famed newscaster Edward R. Murrow and Sen. Joseph McCarthy, and John Turturro's musical comedy "Romance & Cigarettes," starring James Gandolfini, Kate Winslet and Christopher Walken.

Muller defends the strong presence of Hollywood fare in Venice as an attempt to honor America's unique place in film history.

"Modern cinema was defined by a number of directors working within the Hollywood studio structure, so if modern cinema was born out of Hollywood, then why should we leave it outside the door?" he asks.

Adds Croff: "The Venice festival has strong roots in its cultural history, and we cannot move away from that mission -- but at the same time, there is a certain amount of glamour that is necessary to a festival, so we very much share Marco's vision. The Hollywood presence is welcome and required to be part of what the film industry can present to the world."

Focus Features co-chief David Linde, a Venice veteran whose company will handle sales this year for "Mountain," "Gardener" and Isabel Coixet's Spanish drama "The Secret Life of Words," believes that while the festival offers a great way to "premiere a movie to the international press and launch a movie to the European audience," he rejects the notion that it is simply a primer for Toronto and lauds the quality of business that gets done on the Lido.

"First of all, there is a certain type of distributor that goes to Venice," Linde says. "After we brought (2003's) '21 Grams' to Venice, it went on to gross $50 million internationally -- and all of the distributors were in Venice. I wouldn't bring those films unless Venice attracted those top-level distributors."

But that might not be enough to satisfy Muller. During a news conference in Rome last month to announce this year's Venice lineup, he mentioned, as is his wont, the ongoing friendly competition between Venice and Cannes. Muller has made it clear that if the Biennale fails in its plan to update Venice's infrastructure, specifically the ambitious creation of a new Palazzo del Cinema, then he will opt out of a contract extension in 2007.

"I don't think we have contractual power if, by 2006, we are left without a film palace or major renovation of our theaters," Muller says. "I think we would lose our contractual power if we do not announce a number of new initiatives by 2006. ... They can believe in our good faith and enthusiasm for another year, but after that ..."