Planning officer Richard Stevenson is recommending that plans to demolish the Art Deco theatre, along with the neighbouring former skating rink, should be given the go-ahead at a meeting of the development control committee on Wednesday.
The two buildings will be replaced with a new university campus specialising in nursing and healthcare courses should the scheme be approved.
But Mr Stevenson added that any decision by the committee would still be subject to approval from Secretary of State for Levelling Up, Communities and Housing Michael Gove, who would have the power to "call in" the scheme for review.
Mr Stevenson said the plans had attracted 76 letters of objection, with concerns raised about the loss of an important building, and objections to the design of the proposed college buildings to replace it.
Residents had also called for the site to be retained for leisure or tourism use, and voiced concerns that the plans were not befitting of an important gateway to the town.
The Theatres Trust and 20th Century Society had both objected to the plans, he said, although Government-funded conservation group Historic England had raised no objections.
West Midlands Police asked for changes to the design of the proposed college building, reducing the number of entrances and restricting access by vehicles.
Mr Stevenson said a character appraisal for the Dudley town centre conservation found the building made a "medium positive" contribution to the conservation area on the basis of its street facade, and the role it played in the gateway to the area. But it also said the vacant condition of the building was detracting from the area.
A separate appraisal, carried out for the Castle Hill conservation area, said it had a negative impact on the neighbouring zoo buildings.
"The Hippodrome Theatre is seen in certain views as a blocky rectilinear silhouette with an unrelieved long elevation standing directly behind the listed former Safari Café, now the entrance, gift shop," it said.
The Hippodrome has not hosted live entertainment since 1974, but remained in use as a bingo hall until 2009, shortly before it was bought by Dudley Council.
The neighbouring former ice rink is currently used as a martial arts centre, and part of it was also used until recently as the former JB's nightclub.
Mr Stevenson said the scheme would improve the setting of Dudley Castle by improving views, as well as enhancing the Castle Hill and Dudley town centre conservation areas by providing a building with active frontages on all sides.
"Consideration has also been given to the significant benefits a higher education facility would have on the town centre and the wider area, particularly given its concentration on medical and health-related training," he said.
Mr Stevenson said that Mr Gove's department had written to the council requesting that no decision notice should be issued until it had an opportunity to consider the resolution of the committee.