Yeah, the whole point of the joke, is that it's just a simple way for comedians to compete, be obscene, banter and let off steam. It's not meant to be the greatest joke ever, it's just a joke told traditionally in comedy circles since the 70's. The joke is purely the fact that it is so obscene and over the top, and the talent agent isn't even disgusted by what he's just seen, he "simply asks what do you call your act?". The punchline "The Aristocrats" is 'funny' due to the fact that it's both a polar opposite to what has just taken place, but also has a hint of truth behind how some aistocratal families have been perceived to be (inbred). For centuries the royal families of Britain and France have been notorious for inbreeding.
Yes on the whole, it's not a hilarious joke, but that's not the point. On the whole I quite enjoyed this film, I found it interesting and liked seeing all the different acts take on the joke.
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