The film is actually propaganda produced by Princess Oriana.The Duke of Zill was actually a highly competent Big Bad who rightfully disposed of the Princess because she was clearly running her kingdom into the ground with her poor decision making. He originally built the cylinders like he said in the film, "to revolutionize labor." He wasn't exiled to the Land of Zill, he left willingly, traveling to a place where his efforts to improve a society would be appreciated, and there he built an industrial society in the form of Progress City. He then returned to uplift Oriana as well, but for that he needed the Book of Ultimate power. After his defeat, history was written by the victors.
The dimension of Oriana is actually the Earth of Wizards.Both are radioactive wastelands of high-magic that are at war with evil technology filled with fascist villains leading armies of mutant creatures.
This movie started out as an original movie with no ties to Felix the Cat.It was going to be an original movie about a hero going through some bizarre land and saving a princess and her kingdom from her evil uncle, but it had some difficulties getting off the ground. As the cast and crew tried to work on their original movie, someone informed them that they were now going to help make a movie about Felix the Cat. Shortly after that, they had the idea that they could use their original movie for the basis of the Felix the Cat movie by making the protagonist Felix, and that's how the movie turned out the way it was. If that's not the case, then I have no idea how the cast and crew of this movie came up with most of the plot for this movie with Felix in mind.