WMG: Adaptation.

Donald is a figment of Charlie's imagination, and everything after the meeting with Robert McKee is an extended fantasy.
It would tie the ending in with Donald's screenplay in which the detective is the killer he's hunting, it would cancel out all the out-of-character behavior in the last third of the movie, and it would extend the metafictional conceit to its logical conclusion by making all the fictional parts of the story fictional within the story as well.
  • Well, duh...

Charlie gave up after the meeting with McKee and wrote a trashy Hollywood flick (which we are now watching) or let Donald write it.
But, because the trashy Hollywood flick contained Strange Loops, it became critically acclaimed...

The entire film is structured as a joke.
The summation of the plot of a blockbuster about fifteen minutes in is the setup. The ending of the movie is the punchline. Everything else is the lead-in.

There is a literary adaptation of The Orchid Thief that has the exact plot of Adaptation.
This film won the Oscar for "Best Screenplay Adapted from Another Work," after all.


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