Like Cry-Baby, the latter series was set in the 1950s; McGuire played the role of Nicole Thorne, a "shrewish publicist" to a television executive. Notwithstanding the quirkiness of the series, she grasped the opportunity to break away from her Hatchetface image. In one interview, she said: "After [Cry-Baby], when I went on job interviews producers expected to see this big, ugly six-foot-tall Actress whereas I'm just five feet high. This series, I hope, will make people forget me as Hatchetface." She added, "I always wanted to meet David Lynch, so I can't tell you how thrilled I am to be working on the show. And there are lots of other plusses. For Example, it really feels great to show up groomed with my hair in place wearing decent clothes". In one episode, a Magician performed a series of unconventional magic tricks, prompting one critic to describe the sequence as "a must-see, if only for the nightmarishly Fly-like image of Kim McGuire stepping out of a vanishing box with her head on the body of a skittering iguana."

In early 1985, John Waters announced that he was working on a script for a new film entitled Hatchet-Face, which was "about a woman and her multilevel beauty problems". Although this film was never realized, a similar character of the same name was subsequently incorporated into the project that became Cry-Baby. It has been posited that Malnorowski, a grotesque, loud-mouthed member of the teenage delinquent gang headed by Johnny Depp's Wade "Cry-Baby" Walker, had originally been conceived by John Waters with Divine in mind. The overweight female impersonator, who had been a distinctive presence in Waters' films for almost two decades, died suddenly in March 1988, before production of Cry-Baby began.

After principal production of Cry-Baby was completed in July 1989, a series of test screenings was held during which McGuire's performance as Hatchetface was so well-received that Waters decided to insert some additional sequences involving the character. An additional fortnight of shooting took place in November, after which two new Hatchetface scenes found their way into the final cut.

By the mid-1990s, McGuire had all but given up on her film career. In December 1997, she was admitted to the California State Bar and began working as an attorney in Los Angeles, specialising in entertainment and appellate law. She and her partner, Emmy-winning television Producer Gene Piotrowsky, were in New York at the time of the September 11 attacks and consequently found themselves unemployed. The couple moved to Biloxi, Mississippi, where, a few years earlier, McGuire's parents (still living in New Orleans) had purchased a seaside vacation house in the exclusive Holy Land district.

Nevertheless, McGuire continued to work in films over the next few years, with appearances in a TV movie, Acting on Impulse (1993); and an uncredited cameo in John Waters' next project, Serial Mom (1994). Her unusual appearance was also put to memorable use in two off-beat television series, each featuring odd characters in quirky scenarios: the HBO series Dream On (1990) and David Lynch's short-lived On the Air (1992), which was cancelled after only three episodes.

On the aftermath of the disaster, Piotrowsky told a reporter: "Though they plan and equip themselves for something like this, it's never enough. We ought to know: We lived in L.A. during the 1994 earthquake, we were visiting New York on 9/11, and now we lived through this. I told a friend about all of that and he said, 'Do me a favor and tell me where you're moving to next'." The couple was temporarily accommodated in a local grade school with 300 other hurricane survivors before transferring to more permanent accommodation in Mobile, Alabama.

While McGuire thereafter concentrated on her career as an attorney, both she and her partner maintained an interest in the performing arts. In September 2002, they became members of a local theatre group, the Mississippi Repertory Theatre Company, McGuire in the capacity of legal counsel, and Piotrowsky as Director of marketing and advertising.

In July 2005, McGuire's performance as Hatchetface in Cry-Baby was introduced to a new generation of fans when the film was released on DVD as a director's cut. The former Actress was one of several original cast members (along with Johnny Depp, Amy Locane, Traci Lords, Ricki Lake, Darren E. Burrows and Stephen Mailer) who reunited for the filming of a short documentary, which was included on the disc as a special feature. Of the reunion, Waters quipped: "we found all the people today, including Hatchetface. I hadn't seen Hatchetface since we made the movie almost 20 years ago. She looked great, she looked like a regular middle-aged woman. But she looked very different to how she does in the movie, so it was kind of startling."

On September 13, 2016, McGuire was admitted to the ICU at Physicians Regional Hospital in Naples, Florida with pneumonia. After failing to respond to treatment, she suffered a cardiac arrest and died the following day.