The children were exhibiting what I would call dramatizing, talking back, in serting, and taking over. Ballenger called this "entering in"
I have seen on many occasions children exhibit more than one of the ideas presented in this article, and I enjoy the phrase "entering in". the child really does seem to enter in to the story world, the lines of reality blur and they are able to insert themselves right into the plot. I like to encourage such creative thinking and imagination when I read to children, I feel it makes the text much more enjoyable for them and creates a deeper interest in reading.