Dolly Parton said the following in an interview a few years ago about how she feels about Whitney Houston’s version of the song, and specifically about the first time that she heard it:
“They needed a song for ‘The Bodyguard’ and thought my song would be good for it. So they asked me about it and I sent it. And then I forgot about it.
“Then I was driving home in Nashville and I heard it on the radio. It rang a bell but it didn’t hit right away because she was kind of talking it.Then all of a sudden it went into the “I will always love you” part and I had to pull off to the side of the road to listen to it. Seriously.
It was one of the most overwhelming feelings that I have ever had. To hear it done so well, so beautifully, so big… I had no idea that I could write a song that could be so important. And I didn’t; I think she just took it and made it so much more than it ever would have been. I don’t think I’ll ever have such a thrill and a joy as a songwriter. I don’t think I’ll have a bigger thrill… ever.”
I do feel that Dolly was selling herself short as many people felt her version was great and important. But she obviously is sincerely a huge fan of Whitney’s cover.
Dolly has also used much of the profits from Whitney’s version to finance an office complex in a predominantly black neighborhood in Nashville. She calls it “The House that Whitney Built.”
So she has thought very highly of the version since she first heard it and it has helped improve a neighborhood in Whitney’s honor.
This is a photo of Dolly presenting Whitney with a Grammy for “Best Female Pop Vocal Performance” for the song in 1994.