It's Camilla's story
Camilla is the blue-haired lady. It is her story - which is one of dreams, memories, and delusions. Camilla lives in an apartment that bespeaks 1940's Hollywood with its fireplace, artwork and even its light switches. Her day-to-day life is a lonely one involving going to the theatre where she dreams of past glories such as by-gone jitterbug contests. She goes to Winkies Diner much like the old people around Herb and Dan, especially to take advantage of the posted senior citizen discount for dinner. She is lonely and listens in on other people's conversations. She pretends that she has company. The staff feels sorry for her and goes along with the act. It bothered me that I view that scene as if Betty is not even there. Waitresses are trained to put the check in the middle of the table so that no one gets insulted and the waitress doesn't end up with a smaller tip. The check is put right next to Rita. Diane said that she would treat for coffee, but is there a Betty even there to pay for it? Reviewing the dialog, there is no real indication that Betty is even there. When Betty says "Thanks .... Diane" to the waitress, she doesn't even get a response. The waitresses body positioning is one of facing Rita. I think it is fun (at least) to picture a delusional old woman (Camilla) sitting at the diner (near her home) where she buys two cups of coffee - one for an imaginary friend, long since past ("I remember something"). It is not that the waitress looks exactly like Diane/Betty it is that the waitress reminds the Blue-haired lady of someone from her past. Thus triggering her dreams/daydreams.
also the connection of Silencio that Rita said with the Silencio we hear from the blue-haired lady.
This explains a lot. It explains why we see Rita in the bedroom with Betty gone (at the end of that dream sequence). It explains why Betty is the one shuddering in the theatre as the reality of her character falls away.
It explains how Diane is so varied. The sweet lamb at the beginning of the film. The overly helpful soul-mate. I think that Diane did commit suicide and Camilla never fully recovers.
Many people have
commented on the wedding announcement party scene being too dreamlike - versus reality. Perhaps, there is some truth to that. The party scene which starts out so lovely for the couple falls apart, starkly and
cruelly when others at the party are introduced. Is the party scene a strong metaphor for others being involved in their relationship (in real life)? I think yes.
The scene where Diane wakes up can be viewed as Camilla exploring/wondering what caused Diane's suicide. Through Camilla's dream we see a downtrodden Diane in her apartment waking up to the reality of her life. It could be viewed as Camilla's explanation of Diane's increasing desperation - which leads to suicide. Notice that Diane's bathrobe scene leads directly to the suicide scene at the end. In between we see argument(s) between lovers - that Camilla explores and perhaps feels guilty about. Did she leave Diane alone to rot? Perhaps not, but when someone commits suicide it is realistic to view that Camilla blames herself or needs to explore her complicity.
Camilla feels guilty for what happens. She builds a dream that allows them to be reunited and gives them another chance for love. In the end, guilt as well as fundamental problems of roles/and control make it impossible for them to be lovers - yet again. We see Diane closing the door (literally and figuratively) on their relationship. Does Camilla want it to continue? We don't know but it is clear that she wants a friendship/relationship that is unsustainable. The focus on Diane is Camilla working out her guilt and feelings and memories through a dream about the one that died.
Camilla's dreams/fantasies do not reflect much of 2001 because she is more comfortable with the past. It explains the time-dated material. Decade(s) inappropriate props/activities have bothered a lot of people, example, the jitterbug contest. This is not a thing of the 90's particularly with that style of clothes/hair. It explains the hat boxes and dated things within Aunt Ruth's apartment like the old style push-button light switches. It explains things like rotary-dialed phones and Philco refrigerators. Since Camilla is also alive in the 90's it also explains how she can also dream of modern day items such as new Porsche convertibles. When she dreams of movie-making, the car is old showing her preference to the past. It is unclear what happened to her true love. Was she rubbed out by Hollywood moguls concerned about having a star with a lesbian lover? Was Diane suicidal when Camilla conforms and marries her director? Doesn't really matter much other than the idea of guilt that inhabits Camilla's dream.
Camilla loses much of her Hispanic looks and accent and becomes the movie star much like
Rita Hayworth of Gilda fame. This idea may be reinforced by the red wig in Aunt Ruth's bathroom as well as the blonde wig that Betty fits on 'Rita' - all looks that the dark haired Rita Hayworth used in her film roles and yes, an actress that ended up marrying her director. Was this an idea that Lynch liked and borrowed?
When Camilla makes love to a willing Diane she still can't reconcile what occurs and repeats her pattern of denial and silence or better yet silencio. The dream ends with Club Silencio and the return to Auth Ruth's apartment but it is Betty that dissolves before Camilla finally wakes up. In the end, Diane is dead and Camilla hopes for the day when they are reunited in heaven seeing both of them smiling among the clouds of heaven. The earring the last moment of the film a Lynchian moment where the earring shines linking to the starís left earring missing in her dream. Silencio.