Firstly, I liked the episode. I might have to re-think my "this season sucks" theory.
Second! I have a theory...somebody's dreaming and we're all stuck inside his wacky Broadway nightmare...
Wait a sec, I got side-tracked.
Okay. So!
Here it is:
The reason Sam is acting like Not-Sam and the reason Angel is clearly insane is because:
Through some freaky mystical confluence of events, Sam has Angel's soul, Angel is possessed by Lucifer and Sam's soul is still locked in the Cage along with Michael.
TA-DA!
Works for me.
:)