Happy's death smile is a recurring occurrence throughout the series.
The death smile is when Happy stares at the camera and smiles, looking at the viewer. According to Gerasim, when he saw it at first, he didn't understand why it took him so long to speak. Gerasim says later that he smiles, so long that it is enough to read several pages of the Bible to him.
On Nick Jr.Edit
It is unknown how the smile was allowed on Nick Jr. as it could've frighten children of young ages and that the show was meant for.