It's all ridiculous. The set-up is absolutely hilarious, the direction the characters are heading in this episode is south, and it goes in that very direction VERY quickly.
It's a fantastic episode to show first-timers as well. It's a great introduction to every main character's traits and mannerisms, displaying how selfish and messed up they all are.
It's got fantastic lines, cringe-worthy moments, everything that this show stands for. It has you going "Oh no.....oh NO!!!" throughout the whole thing. And the actors' deliveries? SPOT. ON.
And as an added bonus, it really sheds light on how evil and DESPICABLE child beauty pageants are, and how perverted the adults are who are a part of it.