I saw trailers for this back when it premiered at the Seattle International Film Fest and it immediately made my list of movies that I absolutely needed to see. After years of sitting on a forgotten bootleg that I'd started and stopped many times, I finally sat down with it and rode the madness all the way to the end.
Based on a popular Taiwan puppet show called, Pili, Sacred Stone blends traditional glove puppetry with elaborate special effects and epic martial arts battles. The result is a crazy, nearly incoherent story (thanks to hilariously awful subtitles) punctuated with alarmingly violent kung fu fight scenes and special effects driven super powers. It doesn't make a lick of sense but bad movie fans should see it just for the fact that there isn't anything like it on earth.
http://www.cinema-suicide.com/2007/08/08/kung-fu-puppet-show-legend-of-the-sacred-stone/