The main story was centered on the fate of the Pawnee Videodome, a video store owned by Dennis Lerpiss (guest star Jason Schwartzman) so rarefied that Pixar films aren't carried and getting Tarkovsky films with subtitles is seen as a populist gesture. After hosting a screening of "Paths of Glory," Dennis announced that the Videodome, like many video store facing shifting industry paradigms, would be closing down, leading Leslie Knope (Amy Poehler) to vow to save it because it's "the only place in town where people gather to do something intellectual." Leslie decided to get the town's historical society to declare the store a landmark in order to give Dennis a hopefully business-saving tax break -- a move that drew the ire of the libertarian Ron (Nick Offerman), who objected to this government interference in the free market.
Having cultural centers for the community like the video store/screening room is, as Leslie pointed out, valuable and theoretically good for everyone -- a place where you can rent films like "Cinema Paradiso" and "Rashomon" and expand your horizons. But, as Ron suggested, what she's attempting to do is also a type of government bailout for a business that's not functioning as is and is not of interest to most of Pawnee, and while his claim that she's trying to turn the town into a "socialist hellscape" may be extreme, he scored an undeniable point when he called Leslie out on whether she's ever actually rented "Rashomon" (she hadn't).
Leslie's line that "I like the idea that there is a place where I could rent 'Rashomon'" is an articulation of well-meaning impulses of so many of the people interested in film culture in the abstract who don't actually partake of it often enough to really support it from a business sense. It is absolutely nice to know that it's there, but wanting it isn't the same as having it as a working capitalist enterprise, and attention that's paid only when something's about to go under usually comes too late.
Leslie tried to urge Dennis to make some concessions to what the larger Pawnee population would want, with a very funny/grim payoff, but her earnest liberal appeal to keep something around she's sure is valuable but is not all that engaged in herself likely proved a poignant and sad moment for cinephiles in the viewing audience. And as an extra prod at those at home, Mande himself was there in the back of the room playing a guy who kept reminding everyone that all these movies are online and piratable for free, making the whole argument between Leslie and Ron a doomed one anyway -- video stores and repertory screenings may soon slide into the past.