What would have made this at least a LITTLE better....
...is if the story could have been written as a chapter 2 of sorts to Magic. It would make perfect sense. And it would give it a visible back story, and it would forgive this one of a few lazy cop outs.
1. The ghost of the dead ventriloquist would be Corky Withers, who originally had killed himself because he thought his sinister dummy, Fats (the only real voice he thought he had), was controlling him to commit murder.
2. When Corky killed himself, his spirit wasn't strong enough to break the bond with his puppet, so Fats became his embodiment. When Peggy Ann discovered the body of Corky (the movie ended before she did), embracing his puppet, Corky (through Fats) spoke to her with no help from Corky, and convinced her it was him. She went insane, but believed him, and kept the puppet because it was the man she loved.
3. The owner of the dummy (Fats) would be Corky's son Corky Jr., whose mother is Peggy Ann Snow (who bonked Corky in the first movie and got pregnant. She would again be played of course by Ann-Margret), and who in the end turns out to be the [spoiler]dummy made from a human body[/spoiler] because big Corky left behind the diagrams.
Hell, he even had an eerie rhyme associated with him that like most elements of this movie, was way creepier than the Mary Shaw story.
It's all a far fetched thought and would never be made anyway. Just a clever after thought. Better I think that what we actually got.