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The flashback to Sylvester's childhood is actually a scene of Sylvester and his own son.

After Sylvester knits his 'fur' back on, he exits the knitting box and walks away. Granny sees this, takes off her glasses, cleans them, laughs, and says, "Astigmatism." Astigmatism would not cause that kind of vision problem. It might cause some visual distortion or blurriness, but would not cause any color change, as is the case with Sylvester.