There's been a string of high-profile thefts over the past week, and all evidence points to Meggy, so the police detain her despite her having alibis for most of the incidents. It's up to Luigi and Hal, assisted by Welony and Lily since they were nearby, to investigate and clear her name!

Eventually it's discovered that the culprit was... Inkling Meggy? In her Western Spaghetti outfit!?

As you might imagine, it's more complicated than that. This is actually a young Inkling girl who happens to look almost identical to Meggy's original form, and who stumbled upon one of Mr. L's lairs he forgot to clear out when he moved to the CCC servers. Here, she found a corrupted, but mostly complete, archive of the Western Spaghetti simulation, which L had been combing through to find the source of the equipment.

Due to the interference of a mysterious Benefactor, the Inkling got electrocuted by the equipment, somehow transferring data from the simulation into her brain. This caused her memories and personality to be overwritten by the fabricated memories Wren used to prevent Meggy from realizing what was going on before his Torment started.

Or rather, an alternate version of those memories, from an earlier build where he would've been the heroic sheriff and she would've been the dangerous outlaw, before he and Mr. Puzzles realized it would've been too out-of-character for her.

And so Dead-Eye Meggy was created, and proceeded to go on a crime spree both to frame the real Meggy and ruin her reputation and run some "errands" for her Benefactor... and also because that's just how she's programmed.

She gets away, but there's more than enough evidence to clear Meggy, so now we're left with a new mystery.

...One that's at least partially solved for the audience, as we get a flashback to the scene in the alley during A Snake in Horseland, where after the Crew teleported after Ozzy and Garyboy the severed super suction ear slithered off like an actual snake once night fell and froze partway under a dumpster when it heard something approaching. It turned out to be a Rabbid, who spotted the ear snake, mistook it for a normal plunger and grabbed it to play with it.

This turned out to be a horrible mistake, as the ear sprung back to life and lunged at the Rabbid's neck (as much as it has one anyway).

The Rabbid screamed in pain and fear and the shot jumped to the alley wall, where the shadow of the Rabbid's futile struggles could be seen.

Rather than simply dying to the venom like you'd expect, the shadow instead became distorted as the Rabbid was somehow transformed, becoming larger with more exaggerated propertions.

Eventually the screams gave way to rasping laughter, and the shadow on the wall, still somewhat recognizably a Rabbid (albeit an oddly shaped one like some of the major ones in the Mario + Rabbids games) but with disconnected ears and large, three-digit claws in place of mitten hands.