Quote 1
O monstrous beast, how like a swine he lies!
Grim death, how foul and loathsome is thine image!
Sirs, I will practice on this drunken man. (Induction.1.35-37)
The Lord's decision to punish Sly, by transforming him from a "beast" to a "nobleman," anticipates the way Petruchio will force Kate to change from a "shrew" to an "obedient wife." Both of these forced metamorphoses raise Kate and Sly to more acceptable social roles, but Shakespeare calls into question whether these changes are permanent or even genuine.
Quote 2
LORD
I know the boy will well usurp the grace,
Voice, gait, and action of a gentlewoman.
I long to hear him call the drunkard husband,
And how my men will stay themselves from laughter
When they do homage to this simple peasant. (Induction.1.136-141)
Part of the Lord's elaborate plot to turn Sly from a "swine" into a nobleman involves the transformation of his servants (and himself) into role-playing characters, a reminder that all actors (including Shakespeare) undergo transformations each time they set foot on stage.
Quote 3
LORD
Persuade him that he hath been lunatic,
And when he says he is, say that he dreams,
For he is nothing but a mighty lord.
This do and do it kindly, gentle sirs.
It will be pastime passing excellent,
If it be husbanded with modesty. (Induction.1.66-71)
The Lord's motivation for playing an elaborate and cruel joke is somewhat fuzzy. Does he do it to teach Sly a lesson? What will Sly learn? Or, is it simply to humiliate him and have some fun at the expense of a powerless, lower-class figure? The fact that the joke will be a "pastime passing excellent" is a bit of an inside joke – Elizabethan theater was one of the most popular forms of "pastime."
Useful history snack: Bear baiting (tying up a bear and then releasing a pack of dogs on it while people watched from the bleachers) was another fun Elizabethan "pastime." In fact, Christopher Sly reveals that one of his many lame jobs was "bear keeper," the guy who fed and cleaned up after bears used in baiting contests.