Deliberate mistake: There is just too much movement and detail in the synthetic skin masks. Peyton lost a large portion of his face in the explosion, and cannot make much expression with his own face, but somehow he can make the masks move perfectly just like a real face.
Deliberate mistake: In the climax, the villain Strack fires a nail-gun at Peyton. There are two shots where the camera is basically inside the nail looking out. In both of these shots, the nail moves straight for Peyton and then curves away at the last second, instead of moving in a straight line just past him. This was obviously done for suspense but it still is a mistake.
Deliberate mistake: When the movie begins, Durant's men are frisked by Eddie's, one of whom was tossing his nunchucku seconds before. Angle cuts to Durant's men's weapons falling on the floor, the nunchucku among them. This adds up for tension as to show how heavily armed and dangerous Durant is, but is absurd that Eddie's goon disposes of his own weapon in such a dangerous situation.
Answer: It's just psychedelic imagery to try and show his fragile state of mind and how he's losing it. The shattering light-bulb is likely to show that his mind is "shattering" (as light-bulbs appearing above someone's head are often used to signify brains/ideas in fictional, particularly cartoons), and the marionette "dancing" is the first part of the recurring motif in which he sees himself as a "freak." (Which is paid off later when he starts singing a demented song about "Paying five bucks to see the dancing freak!").