For Alex the project is over, killed by bureaucrats, so he decides to return to Europe. Although Larry doesn't particularly care for Alex, there's no way that he's giving up without a fight (since drug companies are sniffing around with lucrative contracts to offer). The only problem is that they're prevented from testing on a human subject - officially. The answer is to use Alex as a guinea-pig, a concept which requires some persuasive arguments from Larry. However, Alex becomes convinced and donates the sperm for an anonymous egg which Larry nicked from Diana's freezer. Now all they have to do is wait - though the experiment's only meant to last 3 months so Alex won't even get a bump.
Junior exists for one reason only - the chance to watch Arnie acting (unconvincingly) as a woman while he's got a bun in the oven. This line of humour is actually quite amusing, for the first 5-10 minutes. After this the laughs become ever more forced and obvious, as Arnie steadily works his way down the list of pregnancy symptoms. First there's morning-sickness, then his nipples get sensitive (though his breasts refuse to grow despite the heavy dose of female hormones), and finally Arnie ends up in a dress. There are other plot-lines, mostly concerning the tangled relationships of awkward Diana and Larry's ex-wife Angela (Pamela Reed), but these are peripheral.
Interestingly, for a movie which is trying to overturn one of the final taboos (the notion that motherhood is only for women), Junior relies awfully heavily on stereotype. Both Alex and Diana are archetypal boffin types, far removed from the real world though basically decent when they're plucked from their academic shell. However, it would have been a lot funnier if Arnie had been the ditzy, clumsy one and Thompson the cool, logical scientist. Rounded out by toothless villain Banes, there's hardly a third dimension to be found amongst the entire cast (Thompson is at least fresh). Perhaps a script that wasn't so relentlessly predictable and sentimental might have helped but ultimately Junior is standard Hollywood committee fare. It's true that the film isn't awful, it's just pointless, dull and stuffed with worn-out cliches.