Revealing mistake: When Toulon's puppet stage is set on fire, the flames in the foreground look rather like they are projected from a regularly set row of blow torches, rather than erratically flickering flames on a wooden floor. (00:25:05)
Revealing mistake: When Toulon and the puppets start attacking Major Kraus, the weather changes from sunny to stormy back & forth.





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