I then compare that to the Magician's disappearing act, where thick smoke pours out in this same, artificial way.
Then further, I connect it also to the shot of the bum when he's holding the blue box. There's fire and smoke behind him.
So just now I went back to the scene to take a look, and was surprised by a detail that I hadn't noticed before.
As the camera pans past the wall and finally reveals the bum sitting behind the wall, there is indeed a fire behind him (visible between his legs, behind the cart he's sitting on)... BUT (the detail I hadn't noticed), that fire almost immediately goes out (as if on cue), like magic, and we're left only with the smoke, which then starts pouring out thicker and artificially just like the 2 aforementioned instances.
Curious.... very curious.... Knowing Lynch and how he has a fascination with fire and uses it symbolically in many of his films, I know there HAS to be meaning behind this detail of the fire getting "magically" put out, and that he set up the scene specifically for that fire to get put out on cue. Makes me really wonder....
IT IS ALSO VERY IMPORTANT TO NOTICE THAT IN ALL THREE INSTANCES, WE CAN EVEN HEAR THE ARTIFICIAL HISSING SOUND OF THE SMOKE MACHINES! LIKE THE MAGICIAN SAYS, "LISTEN!" (the last thing he says before disappearing into a hissing cloud of smoke). When the Bum's fire goes out, open your ears and you're going to hear the hissing sound of the smoke machine, just like we hear it @ Club Silencio as well as after Diane pulls the trigger.
This jives with an idea I've often expressed in the past (at least on the imdb, idk if I ever mentioned it on this board) when looking at some of the transitions and camera trickery that Lynch uses in the film, that I believe Lynch WANTS us to see the artificiality of the film, that he purposely tries to remind us that we're watching a film, that this isn't real, that things are fake and staged ("it is all just a tape recording" = everything is artificial, a copy of something natural). He calls attention to these facts, and the fog machine hissing sound and artificiality of the smoke's appearance is a further clue to support this, and one of the biggest/most obvious (along with the entire Club Silencio scene). This could be why the film ends with the Club's STAGE and the blue-haired lady. But at the same time, Lynch describes the film as a love story... so then why is illusion and artificiality so important/the main theme of this love story? Maybe the answer is the obvious one, Diane truly loved Camilla and believed Camilla loved her back, but that was the illusion, Camilla didn't loved her the same way, her love was artificial (which is a perfect way to describe her character), and for Diane to find that out, it shatters her entire world. When Betty declares to Rita "I'm in love with you" (one of the biggest shocks in the movie, and a catalyst that causes the movie to take a huge turn, shattering the dream) Rita never says anything back.