The Scene: The titular lieutenant Terence McDonagh (Nicolas Cage) is on a stake-out when he notices two iguanas sitting on the table next to him and he asks, "What are these f***ing iguanas doing on my coffee table?" His partner Stevie Pruit (Val Kilmer) replies, "There ain't no iguana", which only angers Terence more as he flicks at the reptiles. After they finish talking, the hilariously out-of-place Release Me by Jimmy Adams plays as a cheap pinhole camera closes in on the iguana while Cage stares at it incredulously for around a minute before finally snapping out of it.
What It Probably Means: It's not a massive stretch to believe that the hallucinations are caused by a combination of Terence's excessive drug use and his increasingly evident insanity, though taking a minute-long detour to show the iguanas fooling around is a mind-melter even for the standards of director Werner Herzog. On the other hand, given how much Herzog lingers on reptiles throughout the film (he follows a roadside alligator at one point), it's easy to try and find a more symbolic quality for the animals. Is it saying that Terence is himself a reptile, a slimy, slithering creature?
Whatever your interpretation, it's pretty damn funny, and in a movie with so much grimness, well-placed indeed.