According to an interview with Busey I just found, it was, in fact, all improv. And it does, honestly, flesh out his character's insanity much, much better than the others.

Gary: That is not in the film. What's the other character you said? Surviving the Game! That was fantastic and when it came time to do the story about how I got into this game of surviving the game, the line was about three inches long. I told the director, Ernest Dickerson, I said, "Ernest, this is not enough tell the people why I'm here. Can I enlarge this?" And he said, "Yes you can." And I said, "You have just watered my garden! Thank you." So out came the story about me fighting Prince Henry Stout, the bulldog—life and death. And all that was improv. It's used in film studies now at colleges and universities to talk about the power of improvisation and spontaneity. And here is the key to spontaneity. This is a quote. Spontaneity comes from an invisible idea that is there before the creation begins—end quote. We all have it. We all have it in us, this a natural gift.

The other characters look visibly disturbed, too, in an intangible way that you don't get from actors who know what to expect from a disturbed monologue.

It's easy to forget that Busey was one time a pretty respected actor.

Professors show Surviving The Game to their film classes?

5 for our wonderful world.

He's still respected, but respected in the way that you respect a loaded gun or dangerous fireworks.