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Whats the meaning behind...?

I have a question and hopefully someone who has enough knowledge can give me the answer. What's meaning behind the 'inside joke' of toasty? I know toastys are shown after uppercuts or punishers and I know that it's a secret feature in one of the levels in MK2 to battle smoke BUT how was it discovered through an inside joke is the real question, like how did this inside joke become apart of this game?

I have other questions I wanna post up but I'll leave this one to be answered for now.
 
I forget where I read it, but if I remember correctly "Toasty" was something either Dan Forden or Ed Boon said to each other playing... I want to say Total Carnage? That they just decided to throw in MKII for some laughs (on account of Scorpion's fatality, it just makes sense).