The scene is a pretty funny Twin Peaks parody, with music and visuals inspired by Twin Peaks, and includes a joke about seeing a woman holding a log... :)
When Lynch came back for the final episode of that season he refocused it on Laura Palmer and brought back characters that hadn't been seen for many episodes, like Laura's mum or Audrey's brother. They weren't much fun, one being wracked by grief and the other mentally disabled. But that's what Twin Peaks is really about and what gave it staying power.
Everyone (including Diane Keaton when she directed an episode) seemed to think it was this kooky place and the weirdness was the point. There's plenty of fun there, but Lynch really understood it: hence Season 3 which gives you all of half an episode of Fun Dale Cooper before pulling the rug out from under you and reminding you that a girl was murdered and we shouldn't move on from that.
I admit I haven't seen it since the original airing. I would likely evaluate it differently now.
For me it's the pattern for a lot of shows that went off the rails: starts with a strong premise and setting, but gets an indefinite run so the writer(s) can't actually terminate any story arcs and end up floundering badly. It got dramatically better again when he had to wrap it up.
Some shows start off in that state (like Lost - I was familiar enough with the pattern then to avoid getting sucked into that one); some drift into it (Twin Peaks and BSG at least). It usually takes getting cancelled to pull them out of it, which is really sad.
I always thought the most boring major character in Twin Peaks was James Hurley, the would be biker.
I never watched the third series. I think I got part way through the first episode and never bothered with the rest.
If you watch season three, Log Lady gets quite an emotional farewell as the actress was dying of cancer. It's Lynch's insistence on treating even the quirky characters as real human beings that makes all the difference.
TP is about showing the actual dark side of the seemingly cozy rural towns and the American Dream. The Lodge are the dark secrets kept from the locals in order to function as a society and to keep that Romantic -in the German sense- imagery forever. But we all know that's doomed to fail somehow.
NE it's the opposite, it tries to bring some joy from the other stereotyped rural 'bumfuck helltown' to show up actually deep and educated people to the half-spolied urbanite guy. You can even see how die-hard conservatives learn from their opposites and how the urbanite pick ups some useful -real life- skills too.
With TP you are seeing the hidden 'dangers' of depicting a town as a postcard/desktop wallpaper. With NE you are watching what happens when the Romantic image shatters away... from day one, and for a much greater and cozier environment.
When I was a kid/teen and went into a village in Summer, the best moments where not just roaming around a place being 'frozen' in time, but with a pocket radio tuner and science magazines/books bought a few KMs away having the best of both sides (past and future). Oh, and the locals had really great books and music (a heavy metal/ rock compilation) too, in late 90's/early 00's.