Since discovering this classic silent film a month ago I've been searching on Google to see if anyone else had drawn an obvious connection between the two, only to be shocked at finding a mere TWO brief comments about the two being formally/thematically connected (one by critic J Hoberman and the other by an amateur critic who called SJ, "proto-Mulholland Dr". I'm really shocked that with so many influences talked about that this film (which is far from forgotten about) has nearly completely slipped under the radar in its connection to Lynch's film. It's been mentioned numerous times alongside "The Wizard of Oz" (a big frame of reference for MD, which has been discussed in depth) in film studies but never as a prototype to MD.
IF you subscribe to the standard "dream theory" of MD (First 2/3 is a dream, last third is reality), then Sherlock Jr is basically the film in reverse. The boy (Keaton) has hardships in different parts of his life that we see in the first third, but once he falls asleep while projecting a film his "dream self" walks into the movie he's playing and dreams up a new identity for himself as Sherlock Jr, while the other characters in his waking life are given new identities/personalities as well to fit the general frame of the film being projected. He uses his Freudian dream to work out the dilemma's of his waking reality (the movie being projected just provides a basic framework for his own personal dream plot which parallels his real world we saw in the first third). Also, physical occurrences and objects from his reality get filtered and become transformed into his fantastical movie dream. He takes his real situation and heightens and glamorizes himself, the others and the issues into a noir-like mystery. He makes his life into a movie where he is now in charge and he gets what he wants and gets the girl, which is the opposite of his earlier reality. He creates a fantastical dreamworld where he is the hero. The boy (Keaton's real life character has no name) has crafted a dream made from the fabric of many films he's watched, the kinds with mystery/noir tropes that only seem to exist in movies, removed from reality. Like Diane's dream there's many shifts in tone/genre/mood like in any dream. Everything gets displaced and condensed in a subconscious fantasy life where the boy can escape and get lost in another life while still trying to solve a mystery related to his own waking one. Sound familiar?
Only the boy leaves his dream and gets the girl like he fantasized about, whereas Diane leaves hers and is greeted with the same harsh reality she tried to leave behind in her mind.
I think that "Sherlock Jr." is the real prototype to MD moreso than The Wizard of Oz because, firstly, the protagonist also gives them self a new identity in the dream part, in addition to the other characters. This is significant. In TWOO, Dorothy's identity stays the same when she dreams - she doesn't yearn to be someone else, she just wants to get home but uses the people she knows to work out her psychological issues by giving them new identities. "Sherlock Jr." takes this a step further: The Boy, like Diane, is having somewhat of an identity crisis where they can both use the dream to become other people, and use that made up dream persona (Betty/Sherlock Jr) to put the pieces of their subconscious together. They are dissatisfied (to varying degrees) with who they are in their waking life and wish with every fiber in their minds to become a whole new person who is the star of the show and leads the life they themselves helplessly strive for. Both protagonists are involved in something related to film in their real worlds (a projectionist, an actress) and both become detectives in their dreams using new identities. In a way, The Boy wants to act and be a star just as much as Diane does, when he climbs into the screen and has it change to his story being reflected.
I had wondered if Lynch was the first person to use this dream structure (that includes the protagonist also shifting identities in a literal dream they have) and with some research found that Keaton was the one who did it first. Of course, Lynch expands upon psychological and emotional themes in his full length feature with his own singular touch, but Keaton, in a broader sense, "did" the complete Mulholland Dr dream-device blueprint first. Only difference is that Lynch took it flipped it the other way.
Also, first and foremost I believe, Sherlock Jr, just like Mulholland Dr, is all about the transformative power of cinema and the relationship between it and dreaming, how it influences our waking reality and why we crave illusion so much. How our dreams are influenced by illusions on screen just as much as our day residue. I mean, you can go on for hours about the two films being thematically besotted to each other. Again, I'm genuinely shocked that these two films which are both widely celebrated as landmarks of (surrealist) cinema, where boundaries are pushed and all that, have rarely (that I have found) been discussed in conjunction with each other. The parallels are too strong between the two (like I said even more than The Wizard of Oz) that you have to believe Lynch lifted the framework and then did his own thing with it. It's ironic to me that this might just be the biggest influence on Mulholland Dr and yet in large part it's been totally absent from discussions about it.