If I remember rightly The Last Day is where we find out about Lister being abandoned in a box under a pool table, he never found out why. Of course we then saw years later why, it's a nice touch to continuity which often takes the back seat to the Rule of Funny.
I hadn't seen the full episode in some time, just the edited highlight clips ubiquitous on YouTube, hehe. That the series 7 episode, "Ouroboros", expanded on it... "The Last Day" was about a replacement droid to Kryten finally reaching the ship, its circuits went haywire, and the crew has to stop it before it destroys Kryten.
Good point on "rule of funny", and for Red Dwarf it works. The concept works better for a comedy anyway and RD often balances a lot rather well. Not an easy task...
Never cared for series 7. The drama felt forced, often artificial, and more akin to melodrama. Characters that were originally put together out of happenstance now had some revised backdrop or big revelation for what could be called "Rule of Epic". Rimmer's was the most obvious example, though they just about make it work. It still has some nice ideas, and it made sense why they brushed aside the cliffhanger resolution from series 6 due to the delay between years... the blu-ray, for this season, uniquely, has a different frame rate - not quite like the original release that also had the "faux film effect" applied, but not quite the same feel either. The late-90s, where - as with the late-70s for music instruments, using bleeding edge technology to craft a product with didn't always have the optimal effect. Save for autotune, a lot has changed for the better since...
That said, "Beyond a Joke" was surprisingly good. "Tikka to Ride" is a bit eerie at times and feels more like a hard sci-fi novel with Red Dwarf characters grafted onto it but isn't too bad. "Duct Soup" was awful. "Epideme" and "Nanarchy" are a step up. "Blue" has one good thing going for it, maybe two. "Stoke me a Kipper" is digging up fanservice to epic up Rimmer with.
And "Identity Within", the unmade episode, would - if I recall - have bits of it repurposed for the later episode "Can of Worms".
Still amazed at how series 7 through 9 were mixed bags, yet 10 knocks it out of the park, with 11 being solid, 12 being hit or miss, and 13 (Promised Land) solid if not treading back into overdone-epic territory (but not in a bad way, it's more rewatchable for me than series 7.)