I just saw it for the first time myself, and I assumed that it wasn't all a talkie for the same reason "The Wizard of Oz" wasn't all in color, or "Who Framed Roger Rabbit" wasn't all animation (or all live action): the impact of going from "silent" to "talkie" just seemed like it would have been something new and dramatic to the audiences back in 1927. I assume the marketing for the movie would have emphasized the sound, so when the movie began the audience might have initially believed that this merely meant the lack of live accompaniment. That alone would have been impressive. When Jolson stands up to sing, there might have been some additional appreciation for the fact that the musical soundtrack was synchronized to his orchestra. And then when he actually opens his mouth to sing, BAM, the technical wizardry hits them again. I expect there might have been a few "oohs" and "aahs" in the theater at that point.
I could be wrong about all of this, I'm only speculating. But it does seem to me that they really dramatized the technique by choosing to reveal it as they did.
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