I just rented this movie!
The scene where Lama Norbu explains reincarnation goes like this:
He tells Dean that the body and the soul are like a cup of tea, filled with tea. So, he took the cup of tea and smashed it, letting the tea spill on the floor.
He explained that although the cup is no more, the tea will remain tea. The cup is destroyed but the tea continues to be what it is. Then he wiped the tea off the floor, squeezed it, and let the tea run down his hand, and he said "still tea" and let a little laugh come out, like a chuckle.
So basically, the scene is a bit bizarre but explains the point that the body contains the soul, and the mind. It also explains that just because the container is gone, the contents continue to be.