Rumpelstiltskin appears as the antagonist of Shrek Forever After and makes a brief, canon-breaking cameo in Shrek the Third, but perhaps these appearances suggest he was also involved with the events of Shrek 2. One theory suggests that Stiltskin's different appearance in Shrek the Third can be explained, making all three sequels to the original Shrek better in the process. The Shrek saga has many villains, but it is the deal-making fairytale creature that may have more of an impact on the series than Lord Farquaad, Prince Charming, and the Fairy Godmother put together.
Rumpelstiltskin does not appear in the first two Shrek movies, which see Shrek (Mike Myers) rescue Princess Fiona (Cameron Diaz) from a dragon guarded tower with the help of Donkey (Eddie Murphy) and then defeat the Fairy Godmother (Jennifer Saunders). However, the villain is seen attempting to make a deal with King Harold and Queen Lillian during the prologue of Shrek Forever After, in a scene set during the events of the first Shrek movie. A character named Rumpelstiltskin does make a brief appearance in Shrek the Third as part of Prince Charming's army, but he bears little resemblance to the villain voiced by Walt Dohrn. The character meets the ogre in the fourth Shrek movie and tricks him into making it a deal so that Shrek was never born, leading the ogre on his own It's a Wonderful Life inspired adventure to restore the timeline.
If Rumpelstiltskin was actually working with both Fairy Godmother and Prince Charming the whole time, all three of the Shrek sequels would have more depth, making them feel far more unified. Additionally, this would also explain why there is a character called Rumpelstiltskin in Shrek the Third despite his obvious differences to the villain of the same name who appears in the next movie. Stiltskin could well have actually been working with the villains of the second and third Shrek movies after finding out who foiled his plan to steal the kingdom of Far, Far Away from Harold and Lillian: Shrek.
Shrek Theory Explains Where Rumpelstiltskin Was During Shrek 2 
Though Rumpelstiltskin doesn't feature in the best Shrek movie, Shrek 2, it is made clear exactly what he was up to when that movie takes place. As Shrek Forever After's prologue takes place towards the middle of the first Shrek movie, it's apparent that Stiltskin had his deal rejected by the King and Queen and, crucially, deduced that it was Shrek who was the cause of all his misery. The villain is then clearly shown to be down on his luck, living in a trailer park with his goose, Fifi and eating trash even into the events of Shrek Forever After.
His last chance at happiness is taken away, in his mind, by Shrek. It therefore makes total sense that Stiltskin would seek to align himself with the Fairy Godmother. While her plan would, of course, mean Stiltskin would not become ruler of the kingdom, he could at least get back at the cause of his misery by separating Shrek and Princess Fiona and leaving Fiona in a loveless, fake relationship with Prince Charming, pretending to be a human Shrek. Stiltskin has also already been shown to be willing to work with other villains, as evidenced by his alliance with the witches during Shrek Forever After, adding credibility to the theory.
Having Rumpelstiltskin Behind Everything Explains Shrek The Third Plot Hole
While there is little indication as to what Rumpelstiltskin's role in helping the Godmother could have been in Shrek 2, his presence in Shrek the Third makes things clearer. Stiltskin is clearly a part of Prince Charming's army, even speaking nervously when he is singled out from the group by Prince Arthur (Justin Timberlake). If this theory is accurate, this means that Stiltskin had maintained his alliance with Prince Charming, joining his side despite the death of Charming's mother after her spell backfired against King Harold's armor, killing her and magically turning the royal into a frog. This explains why he's nervous when Arthur points to him: he does not want his cover blown, letting Shrek know who the architect of his misery is.
Stiltskin's changed appearance can also be explained. Shrek Forever After shows the character is a fan of dressing up, wearing an extravagant wig and robes during the timeline where Shrek is never born, Fiona was never rescued and became the leader of a clan of ogre warriors, Puss in Boots is overweight, and Donkey is enslaved by witches. The crafty Rumpelstiltskin was therefore simply blending in with the crowd, explaining both this plot hole and where he was during the events of Shrek the Third. It was not a plot hole: it was the same Rumpelstiltskin all along, plotting his revenge on Shrek no matter who he had to work with to do so.
Rumpelstiltskin Being Behind Everything Makes Shrek Forever After Better
Rumpelstiltskin has a lot of impact in the latest Shrek sequel, Shrek Forever After as a fresh antagonist that feels completely distinct to Lord Farquaad, the Fairy Godmother, and Prince Charming. However, his plan to literally end Shrek's existence is made even more impactful if he has been behind the evil deeds of both previous movies. This improves his relationship with Shrek, a character with whom he has very little personal stakes in the movie, despite having one of his many plans foiled by him. The additional reveal that losing Far, Far Away because of Shrek has driven Stiltskin to maintain a hatred of the ogre gives him much stronger personal stakes and makes their dynamic more interesting. Additionally, all of Shrek's villains have come into his life due to wanting to marry Princess Fiona (or have their son marry her), and just want Shrek out of the way. This theory makes Stiltskin's motivations more interesting, as he is intent on getting revenge on the title character himself, rather than Shrek simply being an obstacle to get to Fiona as with the other three, making him Shrek's most personal villain yet.
Giving Shrek's final villain such personal stakes and knowing that he was involved in making Shrek's life difficult in the past two movies also improves the Shrek series as a whole. By having a central antagonist who is intertwined with the stories of all four movies, the series has a villain who remains consistent throughout, tying all four films in the Mike Myers led Shrek movie franchise together in a neat package. Stiltskin becomes Shrek's main villain after Farquaad sends him on his mission to rescue Princess Fiona, and from there on out is the main antagonist in Shrek's life up to his defeat in Shrek Forever After, potentially spending years trying to get his revenge on the ogre.