The mystery of the fat taunting thing on the island has been solved!
And here's the kicker! It's the most amazing thing in the series! This pudgy little guy does...
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ABSOLUTELY NOTHING!
He's merely a solid block! You can't talk to him, walk over him, or anything. He's just one of those useless things that create threads like these years after the game has come and gone, with people scouring for information about what it is or how to get it...and mysteriously, said information never showing up.
Confirmed in both US and JP versions to do absolutely NOTHING.
Mystery solved.
EDIT: Oh I almost forgot...if you want to confirm this for yourself, here's what you do...
For best results, have a savegame close to this area, so the party will be correct.
Next, pick up the cf2editor from the Frozen Utopia site (it's a ROM so you'll have to be using an emulator, and if using Magic Engine, use the OLD STYLE bram, NOT the horribly nonstandard new one!).
Now, open 'er up and load your savegame.
Go to PARTY/LOCATION DATA
Enter the following data AFTER MAKING NOTE OF THE INFORMATION THAT IS ALREADY THERE:
---MAP X: A0
---MAP Y: 1D
---MAP ID: 07
Go back to the main menu (press II twice) and save the buffer.
Load CF2.
Load your saved game.
You will appear on the little island with the pudgy bastard.
EDIT2: Oh yeah, about Magic Engine's silly BRAM stuff...
If you're using the new style BRAM, load up your game with the new style BRAM enabled, then do an emulator save state. Quit Magic Engine, switch to the old style BRAM, boot CF2, and load your save state. Then, save in-game at an inn as usual. cf2editor doesn't have access to CF2's save files using the new style BRAM in Magic Engine.