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The Illusionist, Eisenheim (Norton) is invited by Crown Prince Leopold (Sewell) to perform for a private audience. Leopold has the intention of proving Eisenheim to be a charlatan with no real talent and during the show asks him to show something that doe not involve "all the gadgetry". In turn, Eisenheim does an act with Leopold's sword, wherein every individual other than Leopold himself fails to pull out the sword.

I am at loss, as to, why was Prince Leopold offended at the end of the show? Was it simply because Eisenheim pulled out an act he couldn't unravel or was it because even Leopold wasn't able to pull out the sword in his first attempt? Because I remember him staggering a little when he does pull out the sword.

EDIT: The staggering too didn't go down well with me. Why does he stagger?

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Prince Leopald took it as a challenge to reveal the mechanisms behind Eisenhams tricks out of his self-esteem. So he invited Eisenham to his private party to show everyone, like you wrote, that Eisenham was a mere charlatan and nothing more. His plan was to spoil his tricks in front of the public and this can be aptly done in his private place.

At the end of the show, we saw that Leopald failed in uncovering any method of the tricks Eisenham had shown in the party. Even Eisenham made him request to himself through eye-contact to let the sword go with Leopald.

It was a grave insult to Leoplad. He made him looking foolish in front of the public even with no help from any gadgetry. So he felt offended. It came from both his inability to pull the sword out himself and unraveling the trick.

For clarification, Leopald could not pull the sword out if Eisenham did not let it go. If you look closely, Leopald made an eye contact to Eisenham, to which he nodded and then only he could pull the sword out.

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Sp you mean that the Prince indeed, did try to pull the sword out and fail once. – KeyBrd Basher Feb 6 '13 at 10:00
@KeyBrdBasher, Yes, the prince tried once and failed. – Mistu4u Feb 6 '13 at 10:33

Leopold was electrocuted slightly, you can hear the zapping sound of electricity as he pulls the sword off the ground, and the dismay in Leopolds face as he is electrocuted, perhaps a shock from the mechanisms holding the sword down.

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