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There is a "Freaky Friday" Flip between these characters: Betty, Rita, Diane Selwyn, Diane Waitress, Camilla.

  • 1. Betty enters Diane Selwyn's body.
  • 2. Rita opens the box and becomes Camilla.
  • 3. Camilla (possibly) becomes Diane the Waitress.
  • 4. Diane the Waitress becomes Betty.

The cowboy has the motivation to perpetuate this loop.

He is the only one with an interest which actress is cast for the film. How does he enforce it? With the box and the key.

The homeless man plants the blue box on Rita "when the time comes".

He's seen at the end of the film holding it, and is the only character.

There is a secondary "Freaky Friday" Flip between the characters at Winkie's: the homeless man, Dan (the man who has the dream), and Herb ("standing over there").

  • 1. Dan sees the homeless man, and dies.
  • 2. The homeless man enters Dan's body. note 
  • 3. Herb becomes Dan.

Adam must cast Camilla for "his own good" because...

...the Cowboy could punish him by involving him in the unpleasant Dan-Herb-homeless loop. Or he could begin a new loop.

In the actress loop, the waitress has no clear purpose, so it's thinkable that the Cowboy may put extra people in loops.

The hitman does not give the key to Rita for money.

On the surface, he appears to trade the key for the bag of money...which he should never actually keep if the loop continues (the money must somehow get to the next Rita again).

Possibly he was threatened like Adam, or tricked, into taking the job by the Cowboy.

The characters have to perpetuate each loop.

  • The actresses: Being in Diane's body is undesirable, as the box will give her hallucinations. She commits suicide, thus beginning the loop.
  • Dan/Herb/homeless: Being in the homeless man's body is undesirable (for obvious reasons). If he gives the box to Diane, the Cowboy will induce a dream in Dan (killing Dan), allowing him to get out of the homeless stage for a while.

Why does the Cowboy even care that Camilla is cast?

The film is anti-Hollywood. Quoted in Wikipedia: it's a "vision of the industry as a closed hierarchical system in which the ultimate source of power remains hidden behind a series of representatives" and "a poisonous valentine to Hollywood".

Clearly Camilla is important, but she can't be that important. Despite the supernatural way it's pulled off (with infinite loops), the reasons for it have to be mundane — the Cowboy will earn money from the film, and knows that "Camilla" will make the film as successful as possible. Or something like that.

Basically, it's a way of showing just how wrapped up people are in Hollywood— for what, money and fame?

Several Mind Screws exist in one shared universe.
It all starts with HBO's Carnivàle. Several thousand years ago, the first avatara appeared: one an avatar of good, the other of evil. Every generation, two new avatars were born. The avatars were receiving their good/bad powers from either the white or the black lodge. Had Carnivale not been cancelled, Word of God is that it would have ended with the Trinity nuclear test, in the mid 1940s. It's also stated that Sofie is the Omega: the last of the Avatar, neither good nor evil, the one who will bring about the end. So, in the mid 40s, the avatar lines cease. The lodges, however, continue to exist.

Without avatars to project their influence through, things start getting weird. Instead of only a couple of people with ties to the powers of good and evil, now the powers seem to "leak" out into the world. This brings us to Twin Peaks. The black lodge has Killer BOB, the white lodge has (perhaps) the giant. The two lodges try to influence people in the real world using dreams. Windom Earl, a truly evil soul, is being contacted by the black lodge. The hope to use him as their pseudo-avatar. Likewise, agent Cooper is being contacted by the white lodge, who need a truly good soul to defeat evil. The show was cancelled before this could be resolved, and the series ends with Cooper trapped (perhaps forever) in the black lodge.

As David Lynch has confirmed that Lost Highway takes place in the Twin Peaks universe, and since Mulholland Dr. was originally meant to be a spinoff for Audrey, it can be assumed that these two movies play by the same rules. People are influenced by the two lodges, each trying to gain a foothold in reality without the use of a proper Avatar. As Mulholland Drive is revealed to be mostly a dream meant to cover up the main character's murder of her lover, this could be either the white lodge trying to make her face what she's done, or the black lodge trying to make her forget about it and join them. Similarly, many parts of Lost Highway can be explained as visions from the lodges, the Mystery Man being a creature similar to Killer BOB, etc.

It must be remembered that time moves differently in the lodges than on our plane of reality. In the Twin Peaks prequel movie, Laura is warned about events that won't happen until the series proper. With that in mind, let's take a look at events that happened in Middlesex, Virginia. The year is 1988, and Donnie Darko is a troubled teenager who frequently sleepwalks. He also has vivid dreams. One day, a vision of Frank the rabbit tells him to leave his room. Donnie does so, and his bed is then destroyed by a mysterious falling airplane turbine. Donnie is told that he has 28 days to prevent the world from being destroyed. Clearly, the white lodge is using Frank as it's voice to help Donnie save the world. In the director's cut, Donnie is often seen to "download" information, with close-ups of his eye and many numbers and images flashing by. The Word of God on this is that the information is coming from unseen beings from the future. In actual fact, this is the White Lodge giving Donnie info on future events which he needs to prevent. The story of Donnie Darko plays out over the course of about a month, before Donnie travels back in time and saves the world by letting the airplane turbine kill him instead of leaving his bed. The events that took place during most of the movie end up never happening. They were erased from existence. Of course, the two lodges still remember them, as they exist outside of normal time.

The earlier mentioned Lost Highway is likely a similar story to Donnie Darko, with one or more of the lodges creating increasingly disturbing alternate realities to try and aid their pseudo-avatar on earth. It's possible that the events of Mulholland Drive aren't a dream meant to influence Betty into one lodge or the other, but an alternate timeline that she destroys by traveling back and committing suicide. It's very probably that similar events happen very frequently. Perhaps it's one of the lodges itself that creates these alternate realities in a bid to save the world, or maybe it's the trapped agents Cooper and/or Jeffries trying to get someone to rescue them. Either way, these realities can't last too long, or the world eventually ends.

What happens if one of these alternate realities is not destroyed in a fairly timely manner? Southland Tales is what happens. It's not all that obvious in the feature proper, due to half of the story being told in a tie in graphic novel (whatever idiot thought that would work should be shot), but Southland Tales can best be described as the future of Donnie Darko's tangent universe. Since Donnie sacrificed himself and closed the tangent universe, our reality was saved. However, he did not destroy the alt. universe, instead simply closing it off. Since the tangent universe can no longer effect out own, neither lodge is influencing it. This means that the white lodge isn't acting to save this world, nor it the black lodge acting to destroy or rule it.

This universe begins to fall apart, starting with the discovery of the "fluid karma" that the Treer company finds while drilling of the coast of Israel. Fluid Karma is an organic compound the circles around the earth like a serpent. It can be assumed that our primary universe also has fluid karma, but it's only reachable through one of the lodges. It's likely that fluid karma is what flowed through the old avatars' blood streams (hence why their blood was blue). With no lodge to control the Southland Tales alternate universe, fluid karma leaks out into reality. Another side-effect is "Operation Dream Theory." Here's what the Southland Tales faq page on imdb has to say about that:

"'Operation Dream Theory' was an experiment created by Treer. The Treer generators were slowing the rotation of Earth by .0000006 miles per hour, which caused strange effects around the world.One of these was a rift created in the fourth dimension — the fourth dimension being time itself — at Lake Meade, which was discovered when an airplane flew through it and had all its passengers left with amnesia (bar one - Krysta Now, who gained psychic abilities from it).Once it was discovered, they sent monkeys through it, which failed (Boxer claims that only a human soul could survive the trip). After much trial and error with monkies, Baron decided to send Boxer through it - chosen because of his political ties and his celebrity persona.When Boxer (and Roland) traveled through the rift, it created duplicate versions of both — one set of duplicates traveled 69 minutes back in time, while the "originals" stayed in their original time. There are now two versions of each co-existing in the same universe — two Boxer Santaros and two Roland Taverners.Boxer's original self was incinerated in a car bomb triggered by Serpentine, while the duplicate Boxer is still roaming. "

Reality itself is falling apart. It becomes up to the two Roland Taverners to save (or more likely, destroy and rebuild) their crumbling, neglected universe. The tattoos of various religions and beliefs that cover Boxer's body and are "fighting to see who will will" could be seen as meaning what faith the new universe will follow after the destruction of the current one. After all, the predominant force in the "real" reality has always been the two lodges, absent from this universe. The movies ends with the Jesus tattoo bleeding, Christianity is the victor, and the new reality will follow the rules of this faith.

Club Silencio is a part of the same realm as The Black Lodge.
Considering the origin of the film, it being a series meant to follow one of the characters after the events of the original Twin Peaks TV series, and we know of at least one other film that has ties to the series, it makes sense that Club Silencio shares the realm that The Black Lodge. In fact, one of the patrons in the audience happens to look a lot like Laura Palmer.

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