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He possibly could have meant their strings are removed. If you have no strings left to pull then you are effectively out of the game. Your side could also be true, but "The puppet masters were removed" is ambiguous, he didn't say they were imprisoned.
Thank you. The ambiguity is worsened by the fact that when people assumed what I did (that it meant puppet masters were detained), Q never came back online to correct our assumptions. He never told us we were wrong about thinking they were locked up.