So apparently the entire purpose of Nikki and Paolo was just to build up to a "fun" throwaway episode like this. I got a kick out of the self-referential comments about killing off actors, featuring appearances from just about every season one character who has since died.
I would have loved to have seen Nikki and Paolo serve some higher purpose, but at least they are dead now. It seems like the producers were really just amusing themselves by introducing useless characters for the purpose of killing them without adding anything to the show. Had they impacted the ongoing storyline in some manner on their way out, they might have become memorable or iconic characters as promised. But that didn't happen.
Anyway, they have gotten their "hip" postmodern episode out of the way, and now the producers can get on with the real plot.
(Cough... Girl fight!! Cough...)