^ LOL

Shmi not being freed after TPM is a big plothole. Especially Padme could have sent someone back to Tatooine to make sure Shmi would be alright, since she cared for Anakin, and owes him a little for helping her save her planet.

Maybe Obi-Wan could mention she was freed (but is still on Tatooine) when the subject is brought up in Padme's apartment. It could go something like this: "I don't know why I keep dreaming about her" - "Anakin, we freed her after Naboo, you're going to have to trust everything is fine with her", or something to that effect. I don't think we can make that work with the material we have though.

However, if we could make this work, that would solve the entire issue. I'd still keep in the Watto scene, because it's one of the few scenes that connects AOTC to TPM, just edit it down. Have Anakin ask Watto if he knows what happened to Shmi after she was freed. Maybe we could shuffle Watto's lines around to have him say "I heard she married a moisture farmer named Lars...at least I think it was Lars".

Again, very difficult to do, but it would do a lot for the story if we could make it work.