yah, i also thought that this was pretty strange. just like you guys said before: Loony Toons. But the scene were Kyuubi-Naruto hammered pain into the ground and he survived was really funny
At first the animation confused me and made me think Pain transformed or something. A few minutes in I just settled with that the manga art was also this weird, and watched the episode for what it was, and checked later.

In any case, it's good now that I can forget 99% of what happened in this fight, since I would never figure out how the two can adapt their powers into laser beams.