Lyta Hall. See previous annotations.
The images here are much clearer in the original comic than in the trade paperback reprint. Images on the tv screens include the smiley face button from "Watchmen"; the Beatles, from the cover of their second album, titled "Meet the Beatles" in the US, and "With the Beatles" in the UK; a Jack-o'Lantern, which is a carved pumpkin, associated in the United States with Halloween and a version of the supernatural; the hand (with a 28 on the palm) and arm of the character Takashi from the Japanese comic "Akira;" above Takashi, a fetus, possibly from some famous picture; a skull; above the skull, someone possibly eating a Twinkie, or performing fellatio (it's hard to tell); to the right of the skull, a miniature of this very panel; Mount Rushmore; an unidentified face, possibly one of the artists; an unidentified figure with a knife or sword, possibly on the moon (note craters?); an atomic explosion; Batman, with a giant "Ha Ha" behind, possibly from the tv series.
The buttocks and upper thighs of a woman wearing lingerie; a stegosaurus; Albert Einstein; Groo the Wanderer (from the comic book); an op-art piece; the Statue of Liberty; Friedrich Nietzche; Sigmund Freud; Neil Gaiman (no, it's not Ric Ocasek); an unidentified hand and arm; an unidentified woman; Judge Dredd (from the English comic book); another unidentified person; a possibly Satanic figure.
An unidentified eye; an unidentified person; a prehistoric Goddess figure (upside down); Tom Baker as Dr. Who (from the English television series); an unidentified face (below Baker); a Joker playing card (particularly resembling the Batman villain).
Hector (Sandman) Hall and Brute and Glob. See previous annotations.
This is indeed what the 1970s Sandman's HQ looked like.
Hector has regressed to childhood. This is why he and Lyta no longer make love (page 1 panel 3). This may metaphorically represent the difference between comics as they were (Hall) and comics as they are now (Lyta).
The last few issues of the 1970's Sandman (not written by Jack Kirby) had Jed's grandfather dying, and the boy moving in with an abusive aunt and uncle, and their even lower children. So the first appearance of Barnaby and Clarice would be in that Sandman, #5 or #6.
We have seen Dream's powers before, they indicate that he could easily kill whoever he wants to. Apparently there are rules he must abide by. Rules will turn out to be very important. From issue 9, we learned that an Endless cannot love a mortal without severe consequences. We will learn several other constraints on the Endless in this storyline.
The other, more typical, meaning of "come out of the closet" is, of course, to declare one's homosexuality.
Gaiman may be obliquely referring to the fact the Fury's mother was original the Golden Age Wonder Woman, who was retconned out of existence by Crisis. Or he may be referring to the patch Roy Thomas did by creating the Golden Age Fury in The Young All-Stars. GA Fury mothered Lyta and then vanished, although this was never made particularly clear.
"Cereal" ain't exactly the right spelling for these conventioneers.
The guest list reads: The Bone [squiggle], Brother Chip, the California Widow, The Candyman, Christian, Cincinnati Oyster (Oyster may be a synonym for testicle here), The Corinthian, the Devil (Kentucky), the Devil (Oregon), Dog Soup, The Dutch Uncle, The Faggoteer, The Family Man (about whom more in a later issue), and the Fl*sher (almost any vowel, "a" and "e" most probable, followed by "u"). Later, we will meet Dog Soup in person. Rose ends up at the same hotel as the Corinthian, because she is drawn to the stray dreams, as Dream said in last issue.
A Dutch Uncle is someone who speaks frankly, usually offering unwanted advice in a brutally truthful manner, implying naivete on the part of the recipient.
"Rocky Mountain Oysters," also "Kansas City Oysters," refer to testicles, usually obtained as a result of castration to improve an animal as a meat source. The Cincinnati Oyster may very well remove or eat the testicles of his victims.
If you squint really hard, the wall reads "Who Watches the Watchmen?", which was the tagline for Alan Moore's and Dave Gibbons's Watchmen series, an extremely important series about superhumans and the Cold War.
The Corinthian has hungry eyes. What's going on here will become more clear later.
I believe that the ultra-sonic whistle was in fact a weapon of the original 1970s Sandman. Hey, it was Kirby. You want sense, read a newspaper. You want thunder and fury, read Kirby.
It's not really clear here, but this is the tragic and lamentable death of Barnaby and Clarice.
Hippolyta: When Fury was the daughter of the original Wonder Woman, being named for the queen of the Amazons made sense. Post-Crisis, of course, nothing made sense.
Jed has fled, and that is the Corinthian who picked him up. Rose is drawn to the stray dreams, this time by means of her brother.
Greg Morrow wrote the first version of the Annotations. William Sherman reminded me to look at the screens on page 1 and identified most of them. Shannon D. Appel also helped. William also saw the graffiti on page 12. Charles Jordan suggested the interpretation of Lyta and Hector no longer making love. Steve Simmons explicated the euphemistic use of "oysters". Tom White and David Goldfarb confirmed Barnaby and Clarice's earlier existence. David cited Amazing Heroes magazine as his source. Volker Sorge, via Peter Bruells identified Nietzsche. Joel Tscherne corrected the Beatles' album chronology, fully explicated here:
Meet The Beatles/With The Beatles was not their first album. The first British album was called "Please, Please Me" and was released in the U.S. as "Introducing The Beatles" on Vee-Jay records. Meet The Beatles was the first Beatles record in the U.S. on Capitol Records. With The Beatles was their second British album. The two albums share the same covers, but the tracks do not match exactly.
Ed (The Anti-Dave) explained the metaphorical significance of a Dutch Uncle. Katie Schwarz corrected the information about the Vortex and some minor errors. Katie Schwarz corrected my English.