Here's how Sennett explains himself in the March 29, 1919 issue of Moving Picture World magazine.
Sennett wasn't as courageous as his erstwhile protege Charlie Chaplin, who released his war comedy Shoulder Arms while the fighting was still under way, though by October 1918 the war was almost over. Sennett's reticence echoes the feeling at the time that Chaplin was taking a big chance by making any aspect of the war a source of comedy, not to mention the feeling more prevalent in our time that comedy "trivializes" war and its atrocities. By the time the next world war rolled around Chaplin again seemed to take a risk by trivializing Hitler in The Great Dictator, but he only set the tone for the mockery of Hitler and other Nazi leaders that continued throughout the war, from Bugs Bunny's battle with Hermann Goering in Herr Meets Hare to Moe Howard's inspired casting as Hitler in Three Stooges shorts. If anything, those burlesques take their inspiration more from Yankee Doodle in Berlin than from Chaplin's films.
With their big moustaches and bombastic manner, the Kaiser and his generals were as obvious a Sennettesque subject as Hitler was Chaplinesque. The comics playing the Prussians, led by Ford Sterling as the Kaiser himself, easily steal the film from top-billed Bothwell Browne, a popular female impersonator on stage whose only movie appearance this is. Browne plays an American flying ace assigned to go behind enemy lines and wreak havoc. Naturally his most effective tactic is to dress as a woman and arouse the rival lusts of the imperial family and the high command. Browne doesn't really make much of an impression because he's supposed to be good at what he does. Comedy might normally derive from how obviously fake a female impersonator is. But if we're supposed to believe that Browne's disguises are effective, our focus shifts to the dupes we know are being fooled. The focus shifts further away from Browne once the top Germans become rivals for the strange woman's affections, and especially when the Kaiserin learns (from her jealous son, the gangly, rat-faced, chain-smoking Crown Prince Frederick [Mal St. Clair]) that Wilhelm is making eyes at the newcomer. Her beatdowns of her imperial husband are among the slapstick highlights of the film. She hits him with everything in her domestic arsenal, spreading collateral damage all over the face. Sennett's director F. Richard Jones sets things up nicely. Knowing he's caught and there's a storm brewing, the Kaiser orders everyone else off their lawn, for delicacy's sake, and then declares mildly to the missus, "Now we're alone." At which point the Empress utterly destroys him; it's the sort of scene that gets funnier as Jones piles on the violence beyond all reasonable expectation. Seeing the Kaiser beat down this way may have been funnier and more cathartic for the 1919 audience than when the Americans attack and drive him from power. The final scenes are pure cartoon: the Kaiser, Crown Prince and General Hindenburg (Bert Roach) run on the Sennett cyclorama, chased by a gravity-defying, horizontally traveling bomb labeled "U.S.A," while Browne's hero makes his escape by latching himself to an aeroplane.
The war might have been over when Yankee Doodle hit theaters starting in March 1919, but wartime hate endured in the film's equation of Germans with monkeys ("both from the same family"). Stereotypes predating the war abound: the Kaiserin is shown draining a huge stein of beer, while the Kaiser's big serving dish conceals a single frankfurter, because Germans love those things. There's lip service to propaganda about war aims -- the Kaiser's fall marks "the end of autocracy" -- but it's possible people had already stopped taking that seriously. There's dishonest propaganda when an Irish POW, in a virtually self-contained subplot, taunts his captors by reminding them of how the Irish beat the hell out of the Germans at the Battle of the Somme. Instead of answering, "Uh, no," the indignant Germans threaten to execute the Irishman unless he becomes a German citizen -- he takes the oath with his fingers crossed before vandalizing a painting of the Kaiser. On a more insensitive note, when the Kaiser critically scrutinizes a rather sad-looking Prussian Guard, he's informed by their commander that these same men bravely stormed and captured a Belgian convent earlier in the conflict. Sennett might not have been able to get away with some of this material a few months earlier, and in any event his caution paid off when the film, often supported by live appearances by Browne and a troupe of Bathing Beauties, became a smash hit. It gave American audiences an opportunity to express their relief, after both the strains of war and the pressures of real hardcore propaganda had passed, with raucous laughter at the threat that now seemed so ridiculous. Yankee Doodle in Berlin isn't a very good film in retrospect, but it's one of those cases where you definitely had to be there at the time