Make pennant two days in advance. Tint fondant light blue. Knead in 1/4 teaspoon of Gum-Tex. Use fondant roller with purple guide rings to roll out fondant 1/8 in. thick. Use knife to cut pennant, 1 1/2 in. x 2 in. Let dry on cornstarch-dusted cake board overnight.
Melt white Candy Melts candy according to package directions. Use melted white candy to attach lollipop stick to back of pennant. Chill until set, about 5 to 10 minutes.
Prepare buttercream icing following recipe directions. Tint blue and violet, and small portions dark blue and black. Reserve a small portion white. Use tip 3 and dark blue icing to outline and fill in letters on pennant. Use finger dipped in cornstarch to pat smooth. Use tip 3 and white icing to pipe eyeball. Use tip 2 and black icing to pipe pupil.
Make cupcakes. Prepare batter following recipe directions. Bake and cool cupcakes.
Decorate cupcakes. Use tip 233 and violet icing to pipe pull-out fur in patches on cupcake. Use tip 233 and blue icing to fill in remaining area of cupcake with pull-out fur. Insert pennant into center of cupcake.