Edit: Okay, here's a kludgy fix. http://jsbin.com/idifof/70/edit#html,live Output is a little grammatically hosed up, due to the recursively Mad-Libs-ian nature of the beasty. I fixed a bunch of spelling, added pound signs to the name variables, and removed my Klingon entry, plus set up colors so that the patterns weren't calling other patterns. (Polka-dotted and tie-dyed stripes are right out! ) It's... interesting, to say the least.
Curious why you added #'s, makes the variables that much more difficult to type, and if the brackets are already being seperated out it doesn't add anything to the generator itself.
That said, you couldn't begin to sort through the grammatical mess this is without adding all sorts of conditionals for punctuation, plurality, etc. which kind of defeats the purpose of having easily accessible groups of tags in the first place. It also makes the run-on problem even worse. You could potentially make it work by grouping fragments that should be worded the same way into larger clumps and building up the sentence from the ground that way ("[SINGULAR_THIRD_PRONOUN] [IS_WAS]" and "[PLURAL_THIRD_PRONOUN] [ARE_WERE]", then using [PEOPLE_DOING] [VERB] for everything else) but that's getting into the absurd.
I think the problem is that it tries to be too many things. A magical effect generator, a name and relationship generator (gain the enmity of Lord Suchandsuch), a weather tracker, etc. It comes out extremely jumbled, like a small child trying to tell their own version of Lord of the Rings. If we trimmed it down to its core (this being, of course, your vagina growing chitin and the sky filling with beautiful rainbows twice) I think the tag thing has a lot of promise, especially for simple stuff like materials, colors, animals, etc.