Don't be silly, Toto - scarecrows don't talk

(Contains Lost Season 3 Spoilers)

So, it turns out Jacob is definitely the schizophrenic hallucination of a deceitful repressed orphan; a skittish trans-dimensional apparition; a scruffy time traveller suffering quantum fluctuation; a cleverly staged trick; or something else entirely. Glad they cleared that up for us.

Despite this confounding mess, the Man Behind the Curtain did offer a few straight-edged pieces to start the Jacob jigsaw. Here's my speculation of what happened.

Jacob is probably real in some sense. By that, I mean he's not just an imaginary spook in some dramatic hoax, but he's not necessarily corporal like Ben and Locke. The dilapidated old shack is Jacob's prison, and Ben needs to keep it that way to maintain his authority over Jacob. Although Ben can perceive Jacob, he knows Locke can't see anything and starts a fictitious one-sided argument. We know Ben is an expert actor from his as performance as fake Henry Gale.

As soon as Locke shines his torch, Jacob sees an opportunity and tries to escape. Notice how Ben tries to pin Jacob back in the chair before Locke scarpers. Then there's the delay before Ben appears at the door, maybe enough time for him to subdue Jacob. There's also the mysterious line of dusty ash, perhaps an impenetrable perimiter to contain Jacob; and the appeal to Locke to "Help Me".

But why would Ben take Locke there in the first place? Perhaps to see if Locke is special enough perceive Jacob? Ben seemed pretty upset when he discoverd Jacob spoke to Locke, maybe slightly jealous. Nevertheless, Ben had to shoot Locke, or otherwise risk being exposed as a fraud, and I think Alex knew something about this danger, and tried to forearm Locke. Locke's already demonstrated an unnatural ability to heal, so I doubt he's going to the giant box factory in the sky just yet.