I don't see anything fishy about renting a theater. The people may have been well known. And multiple deaths usually evokes more sympathy for the surviving family. And the deaths were probably highly publicized (being a plane crash). So it's very possible the Kingdom Hall wouldn't fit all of the people the expected. If my dad had died when he was younger and got around the circuit more, and more of his old friends were still alive, I don't think the Hall he had his funeral in would have held him. As it was, the place was pretty full.
And nobody says they were in the middle of a production. Even so, a lot of stages have a curtain that could seperate the speaker from any potential fixtures set up for a play. By theater, they could have also meant a movie theater. The ones by rent out for business meetings. Why not a funeral service - especially if it's just the service and no body is present?
As for the price difference, that could be policy. At least in the software industry, I can sometimes order a single user license for a lot cheaper than the corporate price. It's a way to get the software being used, being talked about, being spread about, and then you make your money off corporate licenses. $20,000 may have been the going price. They may have sized the people up and offered it for cheaper because it looks like they couldn't/wouldn't pay $20,000. But if Continental was paying, back to the normal rate. That kind of turns the tables. It's not them trying to get all the money they can out of the corporation, it's them being sympathetic to the regular guy.
Now what doesn't pass the smell test to me is the timing. OK, the family is trying to arrange for the funeral. The theater ups the price. Now people at the branch hear about it? How? Is that really the first call you make after you get off the phone with the theater? And if Continental wasn't complaining, I don't see why they'd tell a bunch of people about it. If Continental refused to pay or was given one price and now a higher price and was suspicious, I could see talking to people like "theater's a no-go, what do we do now"?
If anything, moving it to the Stanley Theater was a publicity stunt specifically designed so they could brag about it.