Plot confusion

When Talley makes his initial attempt at luring the captors out, his plan seems to be to pretend that he will give them a helicopter and hope they're not smart enough to realise they will be arrested immediately. However, what do the police think the plan is at this point? A few minutes earlier, they said they would go in and rescue the hostages while Talley is distracting them in the courtyard. When exactly were they going to move in? Clearly Talley has a game of his own to play, I guess that's why he didn't tell the boy to go to the pool area as the police directed. It all just seems muddled at that point. What did Dennis see when he said 'what is that'!, which caused him to realise he was being tricked, and retreat into the house? Thanks