On the night James Franco hosted the Oscars, the show featured a segment in which veteran Oscars host Bob Hope was digitally brought back to life to compere one more time. It typified an Academy Awards show this year that rather failed to reconcile its desire to appeal to younger audiences with its need to remain reverential to its legacy.

Getting much less attention not far from the Kodak theatre, in Beverly Hills, was a gallery exhibition called Unfinished, where just two days prior to Oscar night Franco had presided over the rebirth of another fallen star. Working with director Gus van Sant, Franco launched a powerful installation of video art, cutting a 100-minute film full of unseen footage of River Phoenix from the dailies of Van Sant's modern day classic My Own Private Idaho.

Showing alongside a series of watercolours by Van Sant designed to recall the colourful cast of hip and troubled teenagers that populated the 1991 release, which also starred Keanu Reeves, Franco's film is by far the more interesting work. Through thick, ragged curtains, which hang from the gallery's high ceilings, the film's viewing space is dotted with threadbare sofas, folding chairs and an instant coffee dispenser.

It's decidedly more support group than cinema, but as Franco's piece, set to a score by REM's Michael Stipe, plays on a loop on the wall, there's something rather comforting about the oddly therapeutic setting.

River Phoenix died of an overdose just two years after making Idaho, leaving behind a powerful legacy of performance which included Stand By Me, The Mosquito Coast and an Oscar-nominated turn in Running on Empty. But as the drug-taking, narcoleptic street hustler Mike Waters in My Own Private Idaho, Phoenix delivered the gutsiest performance of his career and was rewarded with an Independent Spirit award for best male lead.

Franco calls his film My Own Private River and presents it as his study of the performance of one of the most talented young actors of the 80s and 90s. Van Sant shot hours of footage of his actors doing little more than living out their characters' lives, and this forms the backbone of Franco's re-edit. There's a basic structure, as we follow Mike Waters around Portland, Oregon, shopping at a grocery store, scoring drugs and having sex with clients, but there's no real narrative on offer.

The footage is set to its raw soundtrack, so what dialogue there is tends to be muffled or entirely inaudible, and it's punctuated with meditative scenes in which very little happens at all. The piece isn't about an actor translating a script, but rather an actor displaying natural instinct and real nuance for his craft, and it's made all the more powerful by the knowledge of what happened next in his life.

Nearly 20 years after his death, it's strange to see so much "new" material of Phoenix. The gallery advises that of course it's not necessary to watch all of Franco's film in one sitting and that it's possible to dip in and out, yet it's testament to Phoenix's mastery of his craft that the film proves compelling enough to keep watching. So clear is Phoenix's intent that, even without a script or story, his character's nature is immediately evident.

Franco's multi-stringed bow runs the gamut of creativity from directing to writing, poetry and performance art. His latest endeavour, which runs at the Gagosian gallery in Beverly Hills until 9 April, suggests that acting will always be his primary interest. It's a fascinating meditation on the craft – an actor's view of acting – through the performance of one who still had so much to offer when tragedy struck.

His Oscars producers might have needed digital help to bring Bob Hope back to the stage, but Franco clearly knows just where to look to explore the enduring legacy of cinema without resorting to such cheap trickery.