Well you for sure get the "ahhhhh omg he is so cute"  from me!  I think he is great.  I agree that this would be a good move on your part to produce these little guys.  I think you have a winner!

A lining is not going to really protect the foam from the puppeteers sweat. The sweat well soak into the lining and then into the foam.   Why add another layer that well keep the puppeteers arm from breathing, thus adding more sweat.

Now that being said, Daryl uses a tube of fabric inside of his puppets that is attached to the neck then runs down to the bottom of the puppets body.  In the bottom is plastic tubing or boning that keeps the shape at the bottom round so that it is easy to slip the hand into. You can even attach a ring to this at the bottom so you can hang your puppet upside down during performance.  I do this as a rule when building hand in mouth puppet also but the "lineing" is not really against the foam.  You can find this demonstrated on Daryl's BlogTV account. http://www.blogtv.com/Shows/736892/buZEY2NGaeXGbeZFZP

How do you deal with the weather if you're outside?

Bring a lot of tarps/plastic cover.  Oh and a dry pair of cloths.    If you have it available or they rent them at the fair a tent cover is good to have.

How much stock do you take (ie. say I take a bunch of my shadow puppets, how many duplicates of each should I have)?

As much as you can fit in the car. You don't want to run out of stock. You really never know what is going to sell at a festival.  Location and the other sellers can impact what you sell. Even entertainment (if the festival has it) can impact what you sell. Keep a record of what sells at each venue for next year if you do it again. Don't forget to think of current trends.  Your client base is not going to be puppeteers but the general public for the most part.  Are mermaids in this year or fish?  What movies just came out for kids.  Unless they are high end puppets that an adult might buy as art, you are going to be selling to children.

I'm thinking of setting up a small section where people can build their own puppets right there, right then. How much would be a good price to charge - if materials are about $10 per person, is $15 reasonable to ask for?

I would suggest not doing this on the first time out.  Are you the only one running the booth?  Can you afford to spend an hour with someone makeing a puppet and lose the sells during that one hour?   I've done the make and take in the past, but hired someone to manage it instead of myself.  I always did better at sitting and makeing a puppet myself. It would attract attention (a crowd) and often then sells.

Is it a good idea to only sell one type of puppet? I was thinking of taking all my current products with me (patterns, puppet parts, shadow puppets, maybe build some kits just to sell there) - but since it's my first stall, should I focus on one thing instead?

See my answer above, remember what your client base might be.  It won't hurt to have the patterns and parts but I think you are more likely to sell finnished products or perhaps the kits.

What about advertising? Does anyone advertise their stall BEFORE the event? And if so, how/where do you do it?

I don't think this is really needed unless you have an established client base that you want to inform.  I would post on your site the fact that you are going to be there and the information about the event.

How much do people sell in order to break even/make a profit? (I know that's hard to answer, but I'm wondering: do people mark up the prices to include the cost of the stall hire, or do people use the same prices as normal - if selling online/elsewhere - and then have to sell more to break even?)

Yep you have to take the cost of booth rental into consideration.  It is the same as shipping, web cost, building rental.

Great puppet Jon! She'll make a great addition to the rest of the monsters I saw on Lisa's video. Do you know who made the other monster puppets for her?

Not sure how well it is going to work for you on foam and fabric. One reason it works well on latex is that once the hair is "pushed" into the latex it compresses around the fiber. Foam is not going to do that. What you might be able to do is glue the hair on the underside once you push the hair through. Could be a tough go since as a rule the head is finished off when you get to the point of adding hair.

You might have better luck ventilating the hair on to a loose weave fabric and then sewing or gluing that to the head. There is a recent post that shows this process... I'll see if I can find it. You can also sew the extensions to fabric strips and apply them to the head that way.

Och!  Seven more!  You are going to be very busy.  Very cool... love the teeth!

Hey folks, I just heard from the author of the Blue Boy pattern via Yahoo messenger!  It was an offline message so have not chatted live but she wanted to post the pattern here and perhaps update it since it was no longer available on AOL.  I IM'd here back and said "YES"!  I had mentioned that we noticed it was gone and that Billy had uploaded a copy to his Gallery.  She mentioned that she would be willing to update it and perhaps expand on it. 

Just wanted everyone to know.

How cool!  You know at some point in your fame you'll be saying "Can't someone else do the interview?". 

$10.00 AUD for a pair of eyes not to much.    In fact I just did the conversion to US dollars and that comes out to just $7.94 a pair. Reference Site  You could pay that for just the supplies to make them yourself in the US.

Fantastic!  The detail is incredible! What brand of camera did you use?