And Allen, whose films have been odes to the city he loves, was full of admiration for the resilience of New Yorkers battling to restore normality after the devastating attacks less than three weeks ago.
"Time passes and you rebuild," he said.
Allen, in London to publicize his latest New York-based movie "Curse of the Jade Scorpion," said he believed the cataclysmic events of Sept. 11 will change how Hollywood entertains audiences in future.
"I think there will be a lot of trepidation in the commercial cinema about that subject matter," he told the Guardian newspaper interview at Britain's National Theater where he made a very rare public appearance to discuss his 35-year career in movies that have earned him a clutch of Oscars and international acclaim.
"I am sure the people in Hollywood whose main drive in films is making money would feel that any reference, any use of the word 'hijacking' or any reference to anything violent or anything remotely associated with the terrible tragedy that occurred would lose customers for them. And that would be the only criterion that matters.
So they will force the minions who work for them to remove these things from movies or not make movies around that subject," he told the capacity audience.
Allen, whose trademark is bittersweet and small-scale comedies set against a New York backdrop, said the bombings were unlikely ever to be the subject of one of his films.
But he added: "I do think it is fair game for an artist who has inspiration or insight into such terrible events."
Asked if New York would be forever affected by the tragedy, he said: "I don't think it has changed New York. Every country, every city has its tragic events. Of course you grieve and it is terrible and it is traumatic but time passes, you rebuild and you move on with your life."
"Even before I left New York last week, people were starting very slowly to get back on track," he said. "They will rebuild the Twin Towers as a symbolic gesture or they will build something comparable."
He said of course there will be changes such as much tighter airport security "but the Yankees will be playing their baseball games, the Mets will be playing their baseball games. People are going to the movies. Gradually the theater will build itself up and the nightclubs again."
But nothing could ever stop the diminutive and quirky New Yorker from being one of life's eternal pessimists about the human condition as he concluded: "It is impossible to be happy. The best you can hope for is that you can be distracted."
Allen was in New York when the Twin Towers were hit. He had earlier said that he was "terribly shocked, but not really surprised" by the terrorist attacks. He said that no city is immune from terrorim - not even New York. He said he was shocked by the irrationality" of the "senseless murder of five-thousand people."
© MMI, CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press and Reuters Limited contributed to this report