Starring: Lionel G. Wilson, Marty Grabstein, Peter Fernandez, Simon Prebble, Thea White
Heads Of Beef / Klub Katz - S1-E11
Continuity mistake: In "Klub Katz" Courage spins his head once or twice. But when he puts his head back on it spins way over once or twice. (Like a thousand)
Queen Of The Black Puddle / Everyone Wants To Direct - S1-E9
Continuity mistake: When Muriel is crying she holding a big napkin which is purple, but when Courage tries to cheer her up it is pink, then goes back to purple.
Continuity mistake: When Courage gives the chicken his suitcase, it at first says "Mars" on it, but then it changes to "Albany".
Talking Fish: There's no such thing as perfect, you're beautiful as you are, Courage. With all of your imperfections, you can do anything you want to do.
Serpent Of The Evil River / The Transplant - S2-E9
Trivia: When the computer is telling Courage about the giant kangaroo monster, the chicken it steps on looks just like the alien chicken from the very first episode of the show. It even has red eyes.
Question: There is an episode where a travelling stage and it's owner get people to perform on the stage to an invisible audience (which cheers and applauds). The people then end up loving the stage and eventually get turned into puppets with strings coming out of the happy/sad faces at the top of the stage. Since most/all of the episodes of Courage are based on, or parodies of, famous tales, myths, stories and films, where is this one from? It sounds very familiar but I can't quite place it.
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Chosen answer: The episode you are referring to is the finale to Season 1, "The Great Fusilli. The episode description is nearly identical to your description. However, I have not been able to find any source of this being a parody. Perhaps this episode was just an original?
MooCow