Cinematics, death re-spawning and Is Possessable
In the example we found an unexpected bokeh transition effect occurs during a Green Guy cinematic. We tracked this down to a character respawn occurring.
Green Guy Spring Has Sprung
There needs to be a trivial content change by the creator to fix this. The Green Guy's controller sensor should be set to not possessable (possession mode/none on page 5) to make clear that this character is a 'non-playable character' and so doesn't need to wait for the character's spawn point to be onscreen for the character to respawn. The previous code would allow unpossessed (but possessable) controller sensors to respawn even when offscreen, which caused problems and inconsistencies.
Green Guy Spring Has Sprung alternative fix
There is another fix here that is worth exploring. The puppet is "dying" because it is key framed to be not-collidable. This causes the puppet to fall out of the level and die. The solution is to power off the puppet when you want to hide it, not to turn off visibility and collision. Collision, specifically, is the thing that is causing the character to fall through the level.