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This entire episode is actually from Data's recollection of the events, his version of a "Captain's log" if he could make one for these events. This includes his extrapolation of the events he wasn't in the room for. This explains some odd characterization, such as Geordi completely blowing off Data's technobabble (since when?), Picard quickly yielding to the Paxans, and Picard's borderline threat to Data.
