As a result of my off-hand reference to the mystery of where Milo's hat came from, I've been getting a lot of e-mails saying that it really is no mystery at all. Perhaps "mystery" is not the right word...it's more like a plot inconsistency that was taken quite far. Here are the four stories of Milo's hat, in order of apprearance in the series:
1) In the episode "Crunch Pod", Milo tells PA that he got the hat in the garbage.
PA: Where did you get that hat? 'Cause that is definitely the hat of a champion!
Milo: I found it in the garbage.
PA: And I waste my time shopping.
2) In "Impractical Jokes", there is a picture of Milo as a baby, and he is wearing the hat.
3) In another episode (I think it was "The Sell-Out"; correct me if I'm wrong), there is a flashback showing young PA, Milo, and Nicky at Greezy 'n' Cheezy. They give Milo a present, and he opens it to reveal the hat.
4) In "The Way They Were", Nicky is a bully who reforms at the end and gives Milo the hat as a kind of gesture of friendship. This is the most cited story, but it is not the definitive.
So there you have it. Please don't e-mail me regarding this anymore. If you do, I'll direct you back to this page! ;)