They were never moving pictures, this was amature photography in 1916 for 2 photos, then a third series in 1920. According to the girls themselves, its actually a flat cardboard cut out, drawn by the girl and secured with a hat pin. I can certainly see what you mean about it being like a puppet/model, but the creatures in the other images are a load more obviously flat than this one. As you pointed out the right arm is very out, as are many parts of the drawings. The interesting thing is that because the cut outs existed in the picture in real life, so therefore the pictures / negatives hadn't been editted, many, many people credited these photos as genuine, up to as late as 1986
If you look closely at the belly of the gnome you can see it, although these scans aren't as clear as original prints obviously. Hillariously enough, the great Sir Arthur Conan Doyle actually believed the hat pin in the image to be a belly button, thus proving that faeries reproduce in a similar manner to humans. Unlike his Sherlock Holmes creation, Mr Conan Doyle was a deep spiritualist and wrote 2 magazine articles and a book using these pictures to prove what he believed to be true.
Just out of interest, heres the other 4 images, I think they are enchanting in their innoicence, and have long had an interest in the legend
This is the original image (after remastering) 1916, taken because the 2 girl's parents did not believe they played with Fairies in the woods. Notice the fairy playing the clarinet like instrument, possibly meant to be a celtic style whistle has no wings. It seems a strange thing for the girl to forget! The second image is the "big hand" one above also 1916, bit 3 weeks later, when their parents still dis believed them.
In 1919 the images were discovered by Sir Arthur Conan Doyle who was a keen member of the recently formed religion, Spiritualism, who saw these pictures as concrete proof that fairies existed, fuelled to write a book in 1920, when the negatives were certified single exposure, and also that the negativs confirmed the fairies were moving when the photograph was taken (obviously now due to the cardboard blowing in the wind. If they had been genuinely flying their wings would be far more blurred, like the waterfall behind them, in slow exposure.) He commissioned more images from the girls, who came back with these following 3, published in 1920. The focus changes and the misspositioning of the right leg in the third image (explained by Conan Doyle as the fairies only having ghostly bodies for visual puropses to the girls and were therefore maliable. This is also how hew explained the modern haircuts and dress styles, and similarity to popular painted images of the time) make it the least believable. However I like this image best for its innocence
This fifth photograph is the one that the girls, much later in 1986, claimed was the only genuine one, as I mentionned above. I have included it at a higher res as the fairies are less clear due to accidental double exposure. There is one in the top left, another in the lower right.
The above illustration is taken from "Princess Mary's Gift Book", a war fund children's charity book, and was only discovered in 1983, where an incredible resembalance is seen in stature and pose with the first image. Its quite clearly where the girls copied their illustration from. Funnily enough, Colan Doyle's work was included heavily in the book, and he himself never noticed the remarkable similarities.
Even on their deathbeds the girls swore that they had seen fairies in the wood, and just faked the photos so they would not be labelled as crazy.
There was a recent big budget motion picture film called "Fairy Tale - A True Story" very closely based on the story. I haven't yet seen it, but am seeking a video copy.
Whilst the subject of fairies may seem girly I'm very interested in folklore and the 'truth' behind its origins. I am currently writing a thesis on this story