Why I think he daydreamed most of the movie
This is a long post (with spoilers, of course). If you don't want to read the whole thing, there's a "tl;dr" at the bottom. (And boy, did it end up being longer than I expected...)
So I came to the discussion pages expecting to find all sorts of controversy about whether Walter's adventures were real or imaginary or some combination of the two (like some kind of Inception-type controversy). I was truly surprised, reading other discussions, that almost everyone believes they were real (and some people VIOLENTLY oppose any idea that they might not be). So I read, and thought, and then started writing.
A lot of people seem to enjoy the movie *because* they think his adventures were real - and maybe if they weren't real, they wouldn't enjoy the movie as much. So if you're married to the idea that everything in the movie really happened to Walter Mitty, just stop reading right now.
I'm still not *totally* convinced one way or the other. The movie plays it straight, that all the daydreams are revealed as such, and everything else really happened to him. But the *evidence* in the movie strongly implies otherwise.
Here are some things that are problematic for a "really happened" interpretation:
* Walter just grabs his stuff *from work* and goes to the airport and flies to Greenland. No stop for extra clothes or anything. Ignoring the odds that the next flight would be leaving immediately (otherwise, he could have gone home for clothes, etc.), there's the problem of his passport. Where did he get it? If he's only flown once before (to Phoenix, as he tells the eHarmony guy), he would have no reason to even *have* a passport, never mind keep it on him or within easier reach than clean underwear. And passports take a while to get - usually a few weeks, but a few days in an emergency (which this wasn't). So from this point on, everything he does is suspect.
* The Greenland flight and airport. They flew that big plane to that tiny airport, with only 2 passengers on board? Maybe they were carrying cargo, but still unlikely. (It's a *small* airport.)
* Walter happens to see the *only* thumb in Greenland that can help him? Unlikely, but not impossible. Likewise for the fact that that same guy is going to get Walter where he needs to go a short time after he arrives.
* The girl singing the "Major Tom" song (actually "Space Oddity") for him in the bar and on the helipad, then disappearing (fading away). Every previous daydream involved him going into his mind, doing stuff, then coming back to the real world, which has been continuing on around him, with him "zoned out." But this time, the daydream and the real world mesh seamlessly. Maybe it's a different kind of daydream, or maybe it's *all* inside a daydream, so there's no need to break out of it.
* The shark fight in the ocean. Very amusing, but *highly* unrealistic (but this is Hollywood, so we could argue that that's how Hollywood thinks sharks work). Where was the pontoon boat this whole time? It was a few dozen feet away from where he jumped into the water, but takes at least 30 seconds to get to him (just long enough for a cool adventure in which he fights off a shark with his briefcase...) After he's rescued, he says "that happened!" or something like that - but that could be part of the daydream, as well, like when a movie character dreams that they just woke up, but they're still in a dream.
* On the ship, his rescuers *just happen* to give him some cake (which his mother made!) in a piece of paper with the photographer's itinerary on it. Again, not impossible, but *extremely* unlikely.
* In Iceland, after he out-sprints *all* the Chilean boathands, he wrecks the bicycle - and then *runs* for what looks to be several miles. We don't know how far it was, but the total distance was 15 km. So whatever fraction he did on the bike, he had to run the rest - and from the looks of the place where he runs up to the kids with the skateboard, *at least* the last mile was uphill (and he runs hard to the very end, and isn't even out of breath). So he's a regular officeworker, but can bike + run 15 km (about 9 miles) without any trouble? Maybe he's a part-time triathloner, but if so, that should have been on his eHarmony page, so it's not likely. This was the part that really tipped it toward "daydream" in my mind. (Also, just like the girl singing up to the helicopter ride, he daydreams the flock of birds making her face, but it doesn't happen in a "separate world" from reality - he's riding the bike before, during, and after the birds, again implying the whole thing is part of a daydream that he hasn't snapped out of.)
* I actually have no trouble with him skateboarding down the hill just before the volcano eruption (or the skateboard tricks in the park, previous to that). I kind of expected him to fall in the park, but if he was extremely good when he was younger, maybe he can still do some of the simpler tricks he learned and skateboard down the mountain road.
* All the phone calls. Ignoring the fact that he jumped into the ocean with his phone in his pocket (it wasn't in his (waterproof?) briefcase), and so it would have been ruined by the salt water, or that he never charges it in his two multi-day trips (maybe done offscreen?), there's the sheer improbability of getting reception in all of the places he gets it. It isn't a satellite phone (they're big; they're expensive to buy and use, and he didn't need one in his regular life; and he didn't have time to get one and get it set up as his new phone). Cell reception at 30,000 feet over the network-dense U.S. is plausible; the wide-open uninhabited plains of Iceland are less likely; the over-18,000 feet one in *the Himalayas* is ridiculous. (That was another point where I thought, they're trying to make it *very* clear to the audience that this isn't real.)
* An Icelandic kid trades his *skateboard* for a (used) Stretch-Armstrong? Not likely, but whatever.
* There's a major volcanic eruption about to happen, but there are no police evacuating people - or at least roadblocks and signs? And the boat crew didn't know? And it erupts within 3 hours of him arriving at Iceland? Much more likely in a daydream than reality. (And if the photographer was on the plane that flew over him, taking pictures of the volcano, why not find out where the plane was going to *land* afterward? I don't think there are too many landing strips on *Iceland*. Or options for *leaving* Iceland after landing.)
* I've never seen or heard of a Papa John's that was dine-in. But maybe they have them in Iceland. (But it's also a really convenient thing to have in a daydream.)
* Walter reads some names in foreign languages to the girl over the phone, and she spells them right and finds the (only and correct) definitions immediately? Again, maybe it's because Hollywood thinks it works that way (she does work in accounting, after all, so...no, that doesn't help). But that's just a minor point.
* How does Walter know where Cheryl lives, to take the skateboard from Iceland for her son? It's not likely she told him, and he didn't even seem to go into his work building when he got back. Maybe he called a friend in HR, to (illegally) get it? Or maybe he didn't need an exact address, because it's a daydream.
* He imagines watching himself being interviewed on Conan O'Brien's show on the TV in the cab, about a conversation he just had, and he doesn't even seem to think about how that doesn't make any sense. It's like he *can't* turn off that imaginary part, so he has to get out of the cab. (If it were real life, he would be able to focus and see what was *really* on that TV, even if he kept zoning out again.) Again, daydream and reality blend seamlessly, unlike the early daydreams, so maybe it's all a daydream.
* Even with the disappointment of not catching up with the photographer, *why would he throw the gift wallet away*?!?! That makes no sense, unless it was part of a script, in which he was going to get it back. No, not the movie script - his daydream script, in which he will imagine that his mother retrieved it, to give it to him later.
* After Walter comes back from Iceland, it casually comes out that Walter's mother knows the photographer (who Walter has never met) and he visits her? EXTREMELY unlikely. Absurdly unlikely. And when the photographer talks to the mother, he's very interested in Walter, his job, his schedule, etc., on top of that? Implausible. That's just ego-fluffing in a daydream. It would have made *much* more sense (in reality) for the photographer to drop off the last set of negatives to Walter himself. (I thought all of this was a setup to find out that the photographer was actually his father or something, but nope. Just moving the plot along, in a highly improbable way. And the photographer didn't even *recognize* Walter when they met.)
* After walking *miles* on his own in the Himalayas after his guides won't continue, Walter *just happens* to walk to about 10 feet away from the photographer without even noticing (while on the most-improbable phone call)? Ugh. Again, maybe Hollywood just figures, "They're both in the Himalayas; they'd have to run across each other eventually. How big can a mountain range be? So we'll make it realistic, and have it happen in the *afternoon* after the guides split." But even then, the photographer has to be very, very, very, very still to get pictures of the snow leopard, but the mountain guides are loudly playing soccer a few hundred yards away? And Walter and the photographer can join in and run and play soccer at 18,000+ feet (which is higher than Everest's Base Camp)? Stretching credibility to its breaking point.
* The LAX incident. He assaults a TSA agent over a flute? Are they now illegal? And why did ICE (or whoever) need someone local to "verify" that he's Walter Mitty? He had a passport. Or why couldn't someone who knows him from back home do it? And *how* did Todd from eHarmony vouch for him, when they'd only talked on the phone? It's a nice way to arrange (daydream) a meeting between the two, but not very realistic. ("Officer, I know you're concerned that his passport might be forged, but here's his eHarmony site. You can't fake those.")
* As Todd points out, Walter went from a boring office drone to 'Indiana Jones became lead singer of a rock band'. All in under 2 weeks. And not because he had to - like he was being chased by a killer robot, or he had to deal with family tragedy. No, he just decided to try to find missing negative #25, and then he naturally and easily changed his whole life and personality. (Maybe that's why people like the movie so much: "*I* could just change my whole life, if I wanted to. And it would be easy - none of that hard work stuff." Self-improvement takes effort and motivation, which is why most people don't do it.)
* I'm not even going to suggest as evidence for the daydream the moderately-improbably parts (*everything* breaks his way in the end: they get more money than expected for the piano, he gets the wallet and negative #25 back, he tells off the formerly-smooth-talking former-boss in public (who suddenly can't come up with anything to say, and ends up looking like an idiot), his sister gets the part in Grease, he gets the girl (who is so choosy that she didn't respond to 300 "winks" on eHarmony, but likes him), and he ends up on the final cover of Life magazine). Those are just typical Hollywood tricks. (But they're *at least* as likely for a daydream, if not moreso, than for reality.)
So to clarify, I actually enjoyed the movie, though I didn't put it on my all-time-favorites list. I'm not trying to bash it. I just thought right up to credits that he was going to snap out of a daydream and (probably) salvage something from that huge chunk of movie time. (Maybe he would come back to the real world and find the negative actually *is* in the wallet, and maybe even *is* a photo of him, or maybe he would end up getting together with the girl and writing his daydreams up as adventure stories or something. Maybe that was the plot all along, but the ending didn't test well with audiences.) Even the girl's otherwise-unnecessary description of how to write mystery books hinted at this: You start with clues needed to solve the mystery, then scatter the clues so that the reader will find them, and they'll look back afterward and realize that they had to fit together that way. I would have taken even half of the clues listed above as solid evidence that the "solution" was that he was daydreaming the whole adventure. With all of them, it's hard to think anything but that, and think that the movie just didn't show him snapping out of his reverie. But maybe I'm wrong - after all, it's a movie, not reality, so if it's inconsistent, the main result will probably be a bunch of people spending way too much time arguing about it online.
tl;dr:
It probably became a daydream from when he headed to the airport, until past the credits. Best evidence: his passport, the cell phone calls, his incredible athletic stamina, his mom is good friends with the photographer (??), the thrown-away-and-recovered wallet, and everything works out as well as it *possibly* could in the *best* daydream. See above for details (and counters to most "it was real" arguments).