Speaking of the Phurba...

This knife was one of the things I really disliked about the film when it came out.  I didn't mind the Tulku but the mystical nature of the phurba really bugged me.  As the years have dragged on I've come to appreciate the symbolism over the "reality" and like it much more.

However, I'm still not okay with the "bendy" aspects of this character/object.  I have chosen to believe that it is all in the mind of the victim as to how this knife is perceived and that it really doesn't bend...

bite...

or wipe imaginary blood from its lips.

Whoever is controlling the phurba at the time is causing the target to see and feel what they want it to.  The flying is the only reality of the weapon.  That and the end result of stabbing the victim.