Other mistake: Toulon dons two Nazi uniforms to make his escape. But with him as a relatively skinny old man and with his beard (since no Wehrmacht or other Nazi personnel came with nothing more than moustaches), and not to mention being recognizable via the 'Gesucht' ('Wanted') flyers, he would have stuck out like a sore thumb.
Other mistake: When Major Kraus and his substitute driver inspect Lt. Stein's corpse, look closely at Stein's chin and collar. Despite the fact that he should be a corpse by now, Stein is still breathing. (00:37:20)
Answer: This is from a flashback Toulon has to events seen in "Puppet Master II." He's the person who taught Toulon the secret to bringing life to his puppets. This scene is being used to give the audience a little reminder of what happened. (And pad the runtime a few minutes.)
TedStixon