I really have no idea what happened here.
Actually, this comes off kind of like a generic script that someone just decided to make into a Leprechaun movie. I haven’t found any confirmation of that or any hint to it at all in any trivia pages online, but it would not surprise me in the slightest. The Leprechaun is only ever called an alien, he doesn’t really act himself, and the big climax has nothing to do with his magic. It has to do with magical future technology, and what it would do with a generic nondescript alien monster.
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Generally, these sorts of horror franchises tend to degenerate into parodies of themselves the more they go on. With this, it seems an odd combination. It wouldn’t surprise me if you’re right, given how most of the move is basically sci-fi/horror comedy with cyborgs and a mutation into a spider, with plenty of stuff that seems just there because the scriptwriters felt like putting it in there.