If Disney was embarrassed at being beaten at its own game (Toy Story was a smash hit of unexpected proportions, and one that caught the merchandising end of the business unaware as demand for action figures far outstripped supply), it didn't show, and as distributor and part-owner of the property, at least it had a piece of the action. Toy Story 2 was greenlighted as a direct-to-video project, Disney's standard tactic for milking a few more bucks out of hot franchises without expending the effort of developing a proper feature film.

As someone who doesn't believe sequels are necessarily a bad thing (granted, they usually are a bad thing, but that's because they're made for the wrong reasons), I had to wonder what in the world they were thinking. Fortunately, Disney claimed to have been so knocked-out by early animation tests that they let Pixar go full-speed ahead with a theatrical sequel. Lucky thing, too -- like the first movie, this one is a joy to behold on the big screen, and technically, it improves on its predecessor on just about every level. (From a business standpoint, the end credits show that the new creations are copyrighted by Pixar, while the previous film's elements are shared between Pixar and Disney, a sign of the production house's new cachet in Hollywood.)

Visually, the main shortcoming of this fully computer-generated movie is that human figures are still rendered relatively poorly, making them look a little creepy. Fortunately, that eerie unreality fits in perfectly with the perspective of the movie, where the secret world of toys is more immediate, and arguably more attractive, than the world of the humans who surround them.

As before, the story is predicated on the premise that the toys scattered around the bedroom of a little boy named Andy -- and, indeed, all the toys scattered around the bedrooms of all little children -- come to life in the child's absence. While the toys scamper about and chatter endlessly among themselves, the real joy of a toy's life is to mean something to its owner. One of the subjects of this new film is the sadness of toys that have been broken or abandoned, left on a shelf to gather dust, and another is the sort of emotional limbo inhabited by toys that are mere prizes of covetous collectors. Most often, those toys are packed away in dark spaces, safe from sunlight and humidity, and often they're not even removed from their packaging. Imagine what a chip that would put on your shoulder, and you'll understand the attitudes of the collector's items that show up in this movie.

Sheriff Woody (voiced by a note-perfect Tom Hanks), the longtime favorite among Andy's toys who was challenged in the previous go-round by the arrival of flashy-new-thing action figure Buzz Lightyear (Tim Allen), suffers an injury early in the film, when Andy tugs too hard on his arm and pulls a seam apart, revealing the stuffing inside. This accident catalyzes some uneasieness among the toys, who know too well that a broken toy is often a forgotten toy, and a forgotten toy is one that loses its reason for existence.

Those anxieties are crystallized when Andy's mom tears through his living room, collecting old toys for a yard sale. And there's an ironic twist to the tale, as Woody winds up being stolen by an avid toy collector who needs exactly that quaint cowboy figure to complete a set that he hopes to sell to a Japanese toy museum for a sizable sum. The rest of Andy's toys, who owe him quite a debt, resolve to rescue him.

That this film manages to turn a box marked "25 cents" into a symbol of doom, or to make its screed against the retention of collectible toys by wrongheaded profiteers fuel for a metaphysical dilemma, is a testament to its skill at metaphor, seamlessly translating the hopes and fears of our real world into that of the toys. Operating on this level of abstraction, Toy Story 2 tackles some mighty heavy issues without once preaching or veering into pretentiousness. (The worst I can say is that Randy Newman seems to have reserved his sappiest lyric in years for Sarah McLachlan, who stops the movie cold by singing it at just about the halfway mark.)

Sometimes I think Toy Story 2 tries too hard. There's somewhat less of the seat-of-the-pants loopiness that energized the first film, allowing it to surprise and excite on a near-constant basis, and more philosophizing about toys, collectors, the nature of happiness and the meaning of life. While that leads to fewer bellylaughs, it does make way for more elaborate humor and an uncommonly ambitious reflexivity that asks the toys to consider their own status as commodities that move in and out of fashion. (Just don't ask why Andy's favorite toy is based on a TV series that was canceled in 1957.)

Where else in mainstream movies do you get such an awesome moment as the one where Buzz arrives at Al's Toy Barn to find it stocked to the gills with his doppelgangers, Buzz Lightyear action figures? Forget the self-congratulatory science fiction of The Matrix -- this is a fundamental mind-bender for Buzz, and the audience shares his humility and wonderment at the sight. Here, as in the roughly concurrent scene where Woody watches tapes of the Howdy Doodyish children's TV show that originated his character, we see our protagonists come face-to-face with God.

In sly ways, then, Toy Story 2 can be read as a film about mortality, a metaphorical consideration of aging and death. Significantly, the film's very first sequence concludes with a grim shocker that had our opening-night crowd in a near-uproar. And toward the end, when Buzz and Woody speculate on how long they have before Andy grows up and discards his old toys, one of them observes, with an alacrity both inspirational and heartbreaking, that it will be fun while it lasts.

So Toy Story 2 joins the tradition of children's stories, largely neglected of late, that say something real about the inevitable joys and tragedies of existence. What's really striking is that both Toy Story films (and, to a lesser degree, Pixar's A Bug's Life) are kids' movies with wit and sophistication to shame most of their ostensibly adult counterparts, not to mention whatever piece of tot-friendly eye-candy is due from the Disney dream factory any given summer. It puts one in mind of the glory days of Chuck Jones and the old gang at Warner Bros. animation. I'm not sure Lasseter and his pals at Pixar will ever operate at quite that level of purely visual invention -- they love traditional narrative too much -- but, boy, it makes me wonder what they might come up with next.