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It's a giant octopus with a dog's face. What more do you need to know?

They were on dope when they made this movie.
It would explain so very, very much.

Alternatively, the story is the result of the narrator's delusion.
Unable to believe that a tragedy like the Titanic disaster could have happened, the old sailor mouse dreamed up an alternate reality where everyone survived the sinking to cope with the trauma.

It's either this or he was trying to protect his kids' innocence - which might backfire when they find out the true story.

Of course he made it all up, though my theory is that he suffered a head injury and did not actually witness the sinking. After all, if everyone did survive, why would the newspaper say "Tragic Ending to the Maiden Voyage of the Titanic: Hundreds Missing" and not mention anything at all about a giant talking octopus suddenly surfacing in New York Harbor?

  • That would explain why Stella, Top Conners' wife, told her grandchildren not to take them seriously. She witnessed the tragedy but doesn't have the heart to break it to her husband.
    fishbong: "The grandfather witnessed such horrible things while the titanic sunk that it tormented him his entire life and eventually drove him mad. Now he tells the craziest stories about it to everyone who will listen. The grandmother is going along with it because at least now he seems much happier and won't wake up screaming 3 times a night."

The Legend of the Titanic was intended as a mockbuster, not of the live-action film, but of a supposed "Disney animated adaptation" of the tale.
MondoTV has had its hand in developing animated mockbusters beforehand, (e.g. Simba The King Lion, Super Little Fanta Heroes). Concerning The Legend of the Titanic, however, for whatever reason, when the people in charge of the film's development got the idea to make it, they were, in fact, getting their idea from the 'Titey' SNL sketch, in that they were mistaking it for a real trailer (possibly either because of a language barrier or one of them coming across it by chance just when they were randomly changing through different television channels) and thus explains what they were (falsely) banking on as soon as they turned in an actual product.

This film started out as a serious effort.
There are shots of women crying and even a throwaway line to the "heroes who gave their lives for the rest", as though they began making a serious film about the sinking. Then, the producer said "hey, throw in an octopus" and the animators took him seriously.

This movie once existed in the Sonic the Hedgehog universe.
But Sonic the Hedgehog (2006) erased it from continuity. The various amounts of Artistic License would fit in with Sonic the Hedgehog (2006) perfectly.

Both these films are the result of the filmmakers trying to make their films look too bizarre to green-light in order to shoot down their company executive’s plans to make a Disney/Titanic mockbuster… and failing catastrophically.
Whether the filmmakers knew that it was a bad idea to adapt James Cameron’s romance film based on a real-life disaster or not, as they started to put their film together they deliberately tried to botch the films both before and during production under the hopes that they could get their executives to realize how much of a bad idea it really was to make them. This unfortunately only resulted in the executives taking it all seriously, as they probably mistook all the bizarreness for creative new ideas for a family movie, right until each film was finished and ready to be released into the outside world.

Everybody actually dies in this movie.
The party we see in the end is them reuniting in afterlife. That would explain the comeback of Tentacolino and the old mouse, anyway.

The movie's an alternate universe of the actual history and the world in general.
"There's room for everyone!" That could mean that instead of 20, there is actually 46/48 lifeboats. The Titanic sunk but had not been eaten away by microbes. The actual Grand Staircase wasn't missing from the so-called "wreck". It sank in one piece instead of two. Ice doesn't float but stuck at the seafloor. Yellow Journalism. They pinpointed the site of the actual "wreck" just three years after its sinking. There is a so-called "treasure" onboard. Captain Edward J. Smith finished the voyage he intended for his retirement. Bruce Ismay got the Olympic-class competition that he wanted and won. Thomas Andrews lived and so Guggenheim and Stead. Just everyone that made Titanic famous lived.

Tentacolino was originally conceived as a totally separate film idea that had nothing to do with the Titanic.
What probably happened was that when the studios were pitched with the original concept, they figured that they could help sell the supposed film about Atlantis and its fantastic inhabitants if they remade it into an official sequel to their existing film about the Titanic by taking its main characters and making them star in the new film.
  • The following criteria that supports this theory include: the general lack of continuity between the two films, the low amount of characters from the first film who do appear in this film, and the various amount of liberties that they take with the old characters, e.g. Smiles being able to talk with the humans and the two main mice sounding younger than they did before. Not to mention that nothing is ever brought up about their friends and relatives from the last film…
    • Furthermore, as Musical Hell put, there's the entire subplot about the living toys looking like a failed pitch for a production of The Nutcracker, even down to having rats who want to conquer the world serving as villains for most of the movie.

The king of Atlantis is evil.
Seriously, he lets the mice go to the surface, nearly causing an old man to drown and seems to know that most of them will end up in an insane asylum for mentioning Atlantis. Then he strands our heroes on a "secret island" where they must live forever. Because they cannot die. And, he never shows his face. That is suspicious.
  • I like this theory, but again, why does everyone include "making them immortal" among the harms? Living Forever Is Awesome, dammit! Especially if you're going to spend eternity with your beloved. The rest of your points are valid, though.
    • Because the characters will be outliving all the loved ones they left behind, obviously.

The first movie was actually funded by the Japanese and Norwegian whaling industries.
They believed that associating an anti-whaling message with such a ridiculous story (and insulting to the victims of the Titanic to boot) would actually turn people against anti-whaling groups in a sort of "this-is-what-anti-whalers-actually-believe" sort of way.

The Elixir of Life contains a drug that makes the users/victims more passive and accepting of their situation.
This explains why most of the characters don't seem to mind being stuck in Atlantis forever. This effect, like the elixir's other effects, is normally permanent. Some time after the events of Tentacolino, Conners ingests an Improbable Antidote by chance, allowing him to realize how bad his predicament really is. He tries to convince his friends to join him and escape, but they refuse as they are still under the effect of the elixir. Conners ends up escaping alone, eventually settling down and (thanks to the antidote) growing old in New York.

Connors was actually recapping the events of Titanic (1997) as he remembered them.
There are several reasons as to why the two stories differ radically: Connors wasn't around for everything that happened and thus had to fill in some blanks himself (how our two leads met, what was going on with Elizabeth's family), he wanted to Bowdlerise the story for his grandkids (the fact that Everyone Lives) and add stuff to keep them entertained (the "save the whales" and magic moonbeam subplots), and his memory has declined with age, making him forget/misremember several events (basically everything).

Old Connors is suffering from delusions brought on by survivors' guilt
In reality, many people did die on the Titanic despite what Conners says. It's possible Conners himself was nearly close to dying that day but miraculously survived whilst every other mouse, including is best friend Ronnie and his girlfriend (not Stella)had perished. His wife Stella was someone else he met after returning home, but his delusions make him misrember her as the girl mouse he met on the Titanic.

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