Well the story is the story we see. The confusion is the cut from Barboni opening the locker to the movie set where they are shooting a film based on Chili's idea, which happens to be almost 100% true. Its just a clever way to show the time lapse. Barboni is about to get caught, and it cuts to the same moment in the movie they are shooting.
Its kind of interesting because during the story, its implied that "Lovejoy" is going to be this big hit film, and Zimm needs money to buy the script, but he gambled money loaned by the Limo guys to raise money, and they want in on the "Lovejoy" script. But Chili's idea is interesting to Martin Weir, and that is the film that gets produced, not the sure thing script Zimm had.
You just have to be resigned-
You're crashing by design

So the whole movie is about making the movie?????

They are filming Chili's 'movie idea' - basically his story he 'pitches' to Zimm when they first meet. It looks like he, Karen, and Zimm are producing, Penny Marshall is directing, 'Bear' is like a stunt coordinator, and it stars Martin Weir and Harvey Keitel.
So, Chili makes it in the movie business. I like the touch that most everyone is driving Olds Sillouettes.
You just have to be resigned-
You're crashing by design