I was going to say that Farmer Ted wasn't passed out when they did it, but actually ...
He didn't remember it AND he wasn't drunk. I think you're right, Hughes's notion was that Caroline went ahead and "did it" with Ted while he was asleep.
VERY problematic, but that was what passed for the moral landscape 40 years ago.
Same with Long Duk Dong ... no way would that caricature pass muster these days. Even back then, though, a couple of (progressive / forward thinking / "woke") critics pointed out that the GONNNGGGG that plays for Dong is comparable to playing "Camptown Races" on a guitar whenever showing a black character.
I'm Asian American myself, and his scenes made me really uncomfortable. But I was in my teens back when the movie came out, and what's clearly date rape today (by both Ted AND Caroline, against each other) did NOT strike me as problematic back then.
Guess we can be grateful for some progress.
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