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Colbert is an old improv actor, a legend in his own time for his ability to stay in character (whatever your politics, if you have any appreciation of acting, his performance at that DC Media Prom last year was amazing).
He met his match. The disparity between his character's politics and "Hanoi Jane" Fonda just made it that much more fun to watch, IMHO. Though sticking her tongue in his one good ear was over the line. Maybe she didn't know.