The problem is that it puts a huge hole in the story, 2 holes actually.
1. Comedian saw the island they were building the squid, this started his investigation for the comedian to get depressed, tell Moloch and be killed (starting the whole story).
2. Second the idea of an alien attack, and more to come is an effective world unifier because it requires world unification and the threat could come at any time (though it never will). Instead new York and Moscow both take hits so those countries find peace? Missing a link in the logic there.

But I agree, the movie was too long and complex already, I heard the DVD cut is going to be much longer, I would like the squid storyline restored in that.