He-Man and the Masters of the Universe/WMG

Prince Adam/He-Man and Teela are distantly related.
Everyone knows that the Sorceress is Teela's mother and that Teela will have to take her place eventually. If the 2002 remake is to be believed, the original Sorceress was the wife of King Greyskull, lord over Castle Greyskull, ancestor of Prince Adam, and the source of his power as He-Man. Since Teela is destined to be the next Sorceress, the role of the Sorceress is probably inherited from mother to daughter. So, since Prince Adam and Teela both have the very first Sorceress for an ancestor, they're related - but not closely enough for any incest problems.
 * Not that it would be any problem to Adam, though; royalty is known to practice incest to keep their lineage purer.
 * His family's only been royalty for one generation. Randor was "a simple soldier" before the Council drafted him. Not enough time to develop an incest tradition.
 * Well, the marriage between cousins may not to be a taboo in the Eternian society...

Panthor can talk but chooses not to because he's afraid of his master Skeletor.
Much like with Toto in the Land of Oz, Panthor is perfectly capable of expressing himself verbally, just like Cringer/Battle Cat... but, considering how easy it is to piss off Skeletor, he chooses not to so he won't accidentally invoke his ire. Proof comes straight from Battle Cat/Cringer, who everyone knows and accepts can talk; clearly, speech-capable non-anthropomorphic felines are commonplace on Eternia.

== Skeletor and Panthor are the descendants and heirs to the power of Hordak's apprentice and his pet during the time of King Greyskull, much like Prince Adam/Cringer are the descendants and heirs to Greyskull's and his pet's power. == It's doubtful that someone as well-prepared as Hordak would not have a backup plan. He probably trained an apprentice to be a counterpart to King Greyskull to ensure his victory. What happened to this apprentice is unknown (he probably underwent a You Have Failed Me moment), but after he was banished, Hordak saw the opportunity to try again with Keldor and gave him the powers of his former apprentice to help him defeat the new threat of He-Man. Where did Hordak keep this power? Why, in the skull staff Skeletor has, where else? Unfortunately for Skeletor, Hordak never told him how to unleash the full powers of his predecessor from the staff, and he couldn't figure it out himself, and so he doesn't have the power to match He-Man.
 * Well, in the '02 series Hordak did turn Keldor into Skeletor, so that theory does have some merit.

The Filmation series, the revived series, the New Adventures series, and the film are all in the same continuity.
The 2002 series clearly shows the origins of most of the characters and even includes a Shout-Out to the original series with the Diamond Ray of Disappearance. The 1983 series continues their adventures by picking up with Skeletor recovering the Diamond Ray. Much later, Skeletor finally takes over Castle Greyskull. He kills King Randor, Queen Marlena, and the Masters of the Universe, forcing Prince Adam into hiding, which conveniently allows him to operate as He-Man full-time.
 * Another possible order of continuity: Sometime after the end of He-Man and the Masters of the Universe and She-Ra Princess of Power, Skeletor magically captures the King and Queen and takes Grayskull. He-Man is unable to revert to Adam because, if he "Lets the Power Return", it will be in Skeletor's hands and he will then be unable to call it forth again. When Skeletor has the Power of Grayskull, he has human eyes. In the first few episodes of New Adventures, Skeletor has human eyes because the power hasn't fully reverted. By episode 5, it almost has, and so his eyes have become red dots. When he gets new powers in that episode, his eyes remain red dots. This could also be a way to explain his change in personality: Losing the power drove him mad. The final battle could also explain his somewhat cybernetic appearance in New Adventures. As for the change of the Power Sword and He-Man's outfit - the Sorceres has been shown to be precognitive, and she probably foresaw that He-Man would be traveling to Primus and gave him a new outfit that would blend in better there. The original sword may have not been able to work at that distance. She had Man-At-Arms help create a new sword that would draw power through space. This is also why He-Man called for the power of Eternia, and not just the castle, in the New Adventures.
 * So... explain the 2002 sword. Please.
 * There was King Grayskull's Power Sword, that was split in two and hidden (a la the original minicomics). Duncan made a tech copy and gave it to the Sorceress to imbue part of the power of Grayskull in it; someday Adam would find the two halves of the real Power Sword and get the full power of He-Man (which could have happened between the end of the 2002 series and the beginning of the 80s one). The sword looked like the tech one in "The Power of Grayskull" because the Sorceress depicted it as such when telling the story, since Adam wasn't yet ready to know about the real sword.
 * And some comics are in the same continuity too (mainly the latest minicomics); King Hiss wasn't "freed" in "King of the Snake Men", he was revived (as he told Serpos would find a way) and everybody's memories about him (save for the Snake Men's memories) were magically blurred to avoid repeating his defeat. Then followed the unearthing of the Three Towers. The change in looks of Grayskull during the film is because, after Skeletor took over, he magically fused Grayskull and the towers, to keep an unique fortress of power.

Skeletor is the rightful owner of Castle Greyskull and ruler of Eternia.
Why is Greyskull so creepy, especially when the Sorceress lives there? Why is the so-called Queen of Eternia from Earth? Why does He-Man derive his power solely from a magical castle and sword? Simple. Greyskull is Skeletor's ancestral home and his rightful seat of power. His family was forcibly overthrown by the Sorceress, who then abuses the power of Greyskull to create an invincible puppet hero under her complete control. Skeletor is obsessed with taking over Greyskull because it's his home. Generations of exile have driven him crazy, but having to live in Snake Mountain surrounded by idiotic minions would do that to anybody. The whole story about him being a "demon" is just revisionist propaganda.
 * Jossed in the later series.
 * To be more specific, watch the episode "The Power of Greyskull" in the 2002 series. It explains everything about the origins of the castle and He-Man's powers.

Eternia is Valinor.
In the origin of the Sorceress episode from the original series, we learn that the Sorceress was given her powers to protect her people from an evil wizard named Morgoth! No way is that a coincidence. In that story, the previous Sorceress gave her the powers of Grayskull to protect her people from Morgoth and his army, "The Evil Horde". The Sorceress exiled Morgoth to another dimension from which he attempts to return and conquer Eternia. He was exiled to Middle-Earth, of course! The ease of dimensional travel to and from Eternia means that it's the center of reality. The name "Eternia" sounds like it means Undying Lands.
 * If Eternia is Valinor, then Etheria is Mordor.

The "Other World" that Orko comes from in the 2002 series is the universe of the 1983 series.
Orko may be a mystical Slider going from one alternate universe to another, looking for the one most like his home. When he reaches the live-action Movie universe, Gwildor will use the Cosmic Key to finally send him home. Hopefully, he'll recognize the place.
 * Nice theory, but even in the 2002 series Orko does several times refer to his homeworld as "Trolla," which was also the name of his homeworld in the 1983 series. Both versions of Orko are unwilling dimension travellers, but both of them have also had the opportunity to go home again and in the end chosen to stay in Eternia. The 1983 Orko eventually found a sure way to return home and would occasionally go back for visits even if he lived on Eternia (this was even the in-universe explanation for why he wasn't in Secret of the Sword -- he'd gone to visit his family in Trolla at the time).
 * Well, we never actually saw Trolla in the 2002 series, so who knows? Maybe it is the same Trolla as the one from the 1983 cartoon, and Orko somehow managed to stumble into both. Though that would raise the question of why he never mentioned that "I used to live in a place similar to this, only that guy looked different, and that guy was less of a jerk, and..."
 * That's because it's not the same Orko! Trolla is the same world, but there are actually two, completely unrelated Trollans who are both called "Orko" (which is a very common name on Trolla) and both accidentally stumbled upon cosmic storms that brought them to similar, yet different alternate universes!

The Power Sword was once in two pieces in the Filmation continuity -- before the first episode
He-Man defeated Skeletor and combined the 2 halves, using his pure heart to make the sword all-good, before the first episode.

2002 Continuity:
A later episode of the 2002 series establishes that Adam can become He-Man because he's a descendant of King Grayskull. Interestingly, this suggests Adam's father Randor could become He-Man. However, which invites the possibility that   is also related to King Grayskull. If this be so, then he too could use the Sword to become He-Man. If so, no wonder the Sorceress requires Adam to maintain a Secret Identity, she doesn't want  to clue in.
 * Pretty sure the weilder needed a pure heart like the original King Greyskull to become He-Man. Though Skeletor could probably use the power in a different way.
 * Your talk about a pure heart planted a nerdgasmic image in my mind. Skeletor clutching the Power Sword and saying "I have a pure heart... pure evil!"
 * It depends who the common parent was. If Keldor and Randor were both decended from Greyskull, then that is a valid theory.

Evil-Lyn Was Going To Become Shadow Weaver
Near the end of the series it's revealed that Evil-Lyn desires to free Hordak from his prison in order and gain power in return. Those who remember the history of the She-Ra cartoon know that Shadow Weaver was created when a sorceress aided the Horde in conquering her world in exchange for power. We saw that the Horde sorcerors wear robes very similar to Shadow Weaver's original outfit and we saw that the last time Hordak granted someone power he drastically warped their features so if he warped Evil-Lyn it's logical she would hide her newly grotesque appearance behind Horde mystic robes, thus creating the new Shadow Weaver. As an added bonus, Evil-Lyn frequently calls upon the powers of darkness and shadows in her spells and Shadow Weaver is well known for her proficiency in shadow magic.
 * It's possible since the next major story arc was supposed to be a three-way battle between a freed Hordak, Skeletor, and the Masters (with Skeletor winning.)
 * Not sure if Expanded Universe is enough to joss it, but a 2003 comic issue (vol 2, #6) showed Shadow Weaver along the Evil Horde still trapped in Despondos.

Everyone's magic, even Skeletor's and Evil-Lyn's, is light magic; Orko's is dark.
Everyone other then him can cast spells just fine and Skeletor wants Grayskull, which is Sorceress's and He-Man's power. All the the light makes Orko's magic harder to work with. He lookes like a Imp from a different world in a land with faeries, elves, and furries; even Skeletor looked like a elf before he lost his face.

Shadow Weaver is Orko's mother
Think about it.
 * Doesn't seem likely when you watch the She-Ra episode, A Talent For Trouble. Hordak and Shadow Weaver have captured Orko and spend quite a bit of time trying to figure out what the hell he is. Neither Shadow Weaver's most powerful magic nor Hordak's mind-sweeper computers manage to make sense of Orko at all (this was a continuation of a semi-running gag on He-Man, where villains or machines tried to scan or make sense of Orko without managing), so it's fairly clear nobody on Etheria has ever heard of Trollans. You might say Shadow Weaver was pretending not to know Orko, for whatever reason, but if she herself was a Trollan, Hordak's technology would at least have recognized Orko as a member of Shadow Weaver's species.

He-Man is a metaphor for homosexuality
Ho Yay everywhere, the main character is a soft-spoken man who becomes a leather-clad warrior by waving around a phallic object and yelling at the top of his lungs, the villain is a skeleton (as in "skeletons in the closet"). So being in the closet with skeletons is bad, and you can be Hard Gay if you just have the power?

Adam and Adora are He-Man and She-Ra because they're half human.
Marlena is from Earth, and no matter how much the people of the Masters of the Universe world look human to us, they're alien. Thus Adam and Adora are beings never before seen on that world, with (if other fictional universes with humans are to be believed) never-before seen potential. Thus they wield powers that no one else on that world (or perhaps, any other world) can.
 * The 2002 series kinda kills that theory, at least for He-Man. Adam can become He-Man because he's a direct decendant of King Greyskull. Since it never got to She-Ra (and, yes, they were planning to), we'll never know the source of her power.

Evil-Lyn stole the Havoc Staff from her father and gave it to Skeletor
The Havoc Staff is tipped with a ram's head. The Faceless One's palace is of a very similar design, and he has another ram-themed artifact that we've seen (the Ram Stone), which Evil-Lyn also stole. Note, too, that Keldor doesn't have the staff in the various flashbacks, nor does he obtain it during his transformation at Hordak's shrine.
 * The Classics bio for the Faceless One figure confirms he guarded the Havoc Staff just like he did with the Ram Stone. It still doesn't tell how did Skeletor get it, though.

Prince Adam and William Murderface are related.
Don't believe me? and have the same face shape and hairstyle.
 * Speaking of cross-universe characters related to each other: 2002 Prince Adam and Luke Skywalker are related to each other.

Mirror Universe Man-At-Arms became Colonel Blast
In volume 2 of the comics based on the 200x series, an evil Man-At-Arms from a Mirror Universe unwittingly took the place of the real Duncan. Near the end of the story, he revealed to have cybernetic parts, including weapons very similar to Rio Blast's ones. When he's sent back to his dimension, the portal changes from the Mirror Universe frequency to Despondos (where Hordak is trapped). Now, Colonel Blast is a Horde member who appeared in the She-Ra: Princess Of Power TV series and had built-in weapons just like Rio Blast. Maybe the evil Man-At-Arms went to the portal right when it was changed frequencies, so the real Duncan returned from the Mirror Universe but the evil one ended at Despondos where Hordak recruited him and renamed him Colonel Blast.