According to Zak Penn, he decided he wanted to be a producer after finding that as a screenwriter, producers had final say and changed his scripts.  The really important thing to remember is that Incident at Loch Ness is a faux documentary, a hilarious account of the making of a movie entitled Enigma at Loch Ness.  Actually, it's a fake documentary of Werner Herzog by John Bailey (How to Lose a Guy in 10 Days, The Divine Secrets of the Ya-Ya Sisterhood), but that's beside to the point.  Enigma at Loch Ness is to be a serious documentary directed by notoriously difficult Herzog about the Loch Ness monster.  Penn, Herzog, and most of the rest of the cast play themselves, and the audience gets to sit back and watch as Penn and Herzog clash on screen, and the movie falls apart around them.  The reason why Incident at Loch Ness works is that Penn and company always play it straight.  They never let on that they are making a movie, even as some of the jokes become downright silly.  The events have just enough reality to make audiences believe them, especially after seeing a film like Lost in La Mancha.

Everybody is excited to work with Herzog (Pilgrimage, Invincible), including Penn (Suspect Zero, X2), cinematographer Gabriele Beristain (S.W.A.T., Blade II), and soundman Russell Williams.  The rumblings of discontent start immediately when Beristain has some concerns, but Penn quickly smooths things over and production shifts to Scotland.  From there, things quickly go downhill.  Penn's role in Incident at Loch Ness is apparently to do everything he can to appear annoying and stupid, while seeming credible.  A running joke in many Hollywood films is that nobody knows what a producer does, and Penn fits the bill perfectly.  While Herzog has a clear idea of what he wants, Penn is concerned with making the film more commercial.  This means buying everybody matching jumpsuits to make their "expeditition" look more authentic, renaming the boat (a sign of bad luck), and hiring Kitana Baker (Intolerable Cruelty, Auto Focus).  Baker is a Playboy model, more famous for her job as a Miller Lite catfight girl, and at one point strips to a teensy bikini to deploy the sonar, shocking everybody.

What makes Incident at Loch Ness really funny is that as time goes on, the battles between Herzog and Penn become increasingly petty.  By the halfway point of the film, it is abundantly clear that this documentary is fake, but that does not prevent its enjoyability.  But up to that point, it's a toss up.  Beristain and Williams are actual people, and have Oscars and Emmys between them.  The preproduction seems realistic, with Penn and Herzog tackling various issues related to the making of a film.  Penn even shows annoyance that Bailey is around filming everything.  Soon, everybody is acting in bewilderment as weird things begin to happen.  By the end of the film, these distinguished people are acting pretty childishly.  The first sign of wackiness erupts when Penn hires Michael Karnow, a cryptozoologist, to accompany them on the trip. 

Penn interspersed the documentary footage with talking head interviews that occurred after the filming.  This cements Incident at Loch Ness' 'fake' realism.  All of the actors are talking about events as if they actually happened, and they manage to stay in character.  Penn is the most amusing.  His character in the film clearly is out to commercialize the film.  Everything he does undermines all attempts by Herzog to make a credible film, and when confronted, Penn lies through his teeth.  Later, he still refuses to acknowledge that many of his actions were responsible for sabotaging various aspects of filmmaking.  By this time, everybody is in on the joke, and laughing along with Penn, who was probably having a ball writing this.