This actually did give me a pretty bad nightmare as a kid - the night after I watched this I dreamed Darth Vader turned my sister into a robot using the same process. No, I don't know why Star Wars was involved. All I know is, suddenly C3P0 was returning my sister to us, only as a 3 year old robot holding her robot blankie and sucking her robot thumb. Apparently, I woke up screaming.
I saw that for the first time about a month ago. It looks silly to me *now,* but I can see where it'd creep the hell out of a kid. (Geeky aesthetics note: I think they should've ditched the mullet wig for a metal shell encasing the hair, like Jocasta from Marvel Comics.)