Out of Jimmy's Head/WMG

This "show" was made by Cartoon Network...
...to stop people from whining about the new shows made. They're aware that fans complain about new shows even if they don't watch them. So, in order to keep up ratings, they made this. Now when a new show comes out, fans will say, "Well, this can't be worse than Out of Jimmy's Head..." and watch it. This may or may not have backfired, seeing CN real, if CN real was another trap by cartoon network themselves.

This show marks the Cartoon Network executive's snapping point.
...they snapped before making this show, and the sheer amount of hate it got finally pushed them over the edge to make CN Real.

Jimmy is a mental patient
...think about it. Even without the talking cartoons nothing about the movie,or by extension the show, makes sense. Alien sister? Come on! He was committed, but then the mental hospital just made him more unhinged. The reason for the race lift of those two friends of his: they were fellow patients that he projected into his delusions. The two that were portrayed by the Asian actors were successfully treated, so he just started projecting onto two new comers. This also works for why he begins to see the Applegate characters: Robin was committed for being an obsessive fan that eventually snapped. He integrates the Applegate characters into his crazy after talking to her. The brain surgery was actually an (unsuccessful) attempt at some sort of treatment. As for why the series was so bad: again he's getting worse and worse.

The entire series is All Just a Dream
The train that hit Jimmy at the beginning of the movie put him into comatose, and the entire series is his dream, hence the nonsensical things that happen in the series, the alien sister is a result of Jimmy's subconscious, she was actually a normal human teenager dressed up for a sci-fi convention that she was going to that day when Jimmy was hit by the train, the cartoon characters are spirit guides also created by his subconscious, as a way of guiding Jimmy out of his coma and back into the real world.
 * That's technically canon.

The concept of the show, namely, the whole "kid sees cartoons in real life" idea, will later be executed better in a whole other show.
And it will probably be on Nickelodeon or Disney Channel, where live action shows are more welcome.