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I'd recommend taking the puppet rig out of the puppet group. The puppet group prefers to stay upright, basically. There's nothing you can do about that. But as it's a cutscene you may not need it to have procedural animations and such anyway.
Scope in to the puppet group, double-tap X on the hips so it selects the hips and all child jointed objects. Then grab it with R2 and scope out as normal; the rig will come with you. Then you can just delete the puppet group itself.