At least, not if Eisner stayed in charge. The former CEO (and current CNBC talk-show host) declined to comment for this article. But James B. Stewart, author of 2005's DisneyWar, recalls that ''[Eisner] would say, 'All creative teams go in cycles, and Pixar is riding for a fall.' He kept telling me that's why he didn't want to renew the deal.'' Eisner seems to have figured that Circle 7 would either so enrage Jobs that he'd break off negotiations — in which case Disney would make sequels more cheaply than Pixar could — or it would chasten Pixar into more favorable renewal terms.

By the end of 2004, Circle 7 was well on its way to filling an eventual employment roster of around 170 artists, writers, executives, and directors — and it was clear that Disney was pouring millions into the venture. First up on the production slate: Toy Story 3, to be directed by Lion King 1½'s Bradley Raymond. (Follow-ups to Monsters, Inc. and Finding Nemo were also in development.) Word was that Tim Allen would likely return to voice spaceman Buzz Lightyear, thanks to his ongoing relationship with Disney (which produced Home Improvement and makes the Santa Clause films). Tom Hanks, a.k.a. Woody the cowboy doll, was a question mark. The scuttlebutt at Circle 7 was that Disney would pitch Hanks a contract for both a third and fourth installment, for a huge payout.

Pixar staffers had reactions ranging from livid to merely sad, but their agitation was aimed chiefly at Disney suits. ''I hold no malice toward any [nonmanagement] individuals involved,'' says Pixar's Stanton. ''They were just artists trying to do something great and feed their families.''

One of those strivers was screenwriter Jim Herzfeld, who by the end of 2005 had turned in a Toy Story 3 script that saw a defective Buzz get recalled (see sidebar, right, for plot details). Hired on the strength of his work on Meet the Parents and Meet the Fockers, Herzfeld wasn't the only scribe in the mix — there was at least one before him and two after — but according to him, his draft got the project greenlit, at least for a while.

''I should have had my agent look into it more,'' the writer says, looking back on his decision to work on the sequel. ''There'd been a pot of bile just simmering on the stove.... [The TS3 crew would say,] 'We were just pawns, used to scare Pixar to the negotiation table.' It was essentially Michael Eisner putting a gun to the head of Pixar's children.'' But the weapon aimed at Woody and his pals ultimately went off in the faces of the Circle 7 staff, when Eisner left Disney in October 2005. Just three months later, new Disney chief Robert Iger essentially buried his predecessor's pet project, announcing that as part of the Disney-Pixar merger, two of Pixar's chief creative architects, Lasseter and Ed Catmull, would now be running all of Disney animation. Their first major move was to pull the plug on all of Circle 7's work — including preproduction on Toy Story 3. It was a swift and decisive blow, but in the months since, according to published reports, Disney has made every attempt to fold roughly 140 out of 170 or so Circle 7 refugees into Disney Feature Animation, leaving about 30 people to find employment elsewhere.