editing How does David Lynch do this to voices?

Hi guys, I'm a movie making n00b and have been given an asignment to create a film using sound effects and, being a huge David Lynch fan I immediately thought of the weird voice effect from Twin Peaks, you can hear it here if you skip to about 3:40 - I really want to recreate this but don't know how, any info would be cool.

Its clearly not simply a case of reversing the dialogue because you can still vaguely here and understand some words. How has he managed to keep the synchronisation with the voice as well? Please hep guys! Here is what I' talking about:

http://www.youtube.com/watch?v=B0CGzPaJUOE&feature=player_embedded#!
 
We did this as an exercise for the movie day camp I ran for kids last summer under the topic "how to make the supernatural on the cheap." It wasn't that hard and the kids loved it...you just record them doing the motion and voice normally and then have them watch it backwards a few times until they have the motions and vocal sounds down, then you record them again.
 
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