(sort of) about the film-within-a-film, Asses Of Fire:
In the movie, Terrence and Phillip are two real people, so surely Asses of Fire is a live-action film? However, there's a joke in the movie when the kids brush off being refused entry to the movie by saying that "it's probably not all that good anyway, the animation's all crappy", they then walk down the street in a poorly-animated fashion. But wait, I thought it was supposed to be a live-action film... if you watch the episode where Terrence and Phillip split up, there's an edition of 'Behind the Laughter' where it shows that Terrence and Phillip did the voice over for a cartoon set in space, which implies that their show (and their movie) is not a cartoon. So what's going on? Well, it's probably just an inconsistency that the writers didn't really care about (and really, I don't blame them), or maybe it's an acknowledgement that the show is a cartoon, set in a cartoon world.