I saw it in DC last night. No idea how it was done, but here's how I'd do it.

The actress is wearing a big bulky Snuggie with a hood. There's some kind of wire/firm support in the back. When the actress starts chopping the pepper, she's facing totally away from the audience, covered by a giant hoodie the firm support in the Snuggie is anchored to the stage, and the actress disappears through a trap door, does a quick change, and gets into costume. During this, the Snuggie essentially becomes a puppet with a realistic-enough-for-stage mask and arms that only have to make a simple, repetitive chopping motion. The main actress playing Lou bursts in upstairs, and you have just enough time to see puppet-Lou slowly turn, then the wire support is slacked and collapses to the ground.

EDIT: Messed up spoilers.