The 1980s flick Excalibur, directed by John Boorman, is quite possibly one of the best fantasy movies of all time, thanks largely to scenes like these - full of Merlin's perverse humor and graphic depictions of human carnality and violence.
This is a great moment from early in the film, when King Arthur's father Uther sires Arthur in the worst possible way. After making peace with Cornwall, Uther meets old Cornwall's wife Igrayne and decides he "must have her!" Yes, he's the kind of guy who is willing to throw a peaceful kingdom away for a night in bed with a hottie. So he starts the war again, and persuades Merlin to help him get between the sheets with Igrayne. Merlin agrees, after Uther promises him "the issue" of his lust (i.e., baby Arthur).
Merlin calls the dragon and transforms Uther into Cornwall temporarily, just long enough for a night of lusty rutting while the real Cornwall is killed in battle - something which Arthur's sister Morgana knows in her witchy way as she watches her mother being ravished by a man who isn't her father.
The best part of this scene is the way Uther stays in his armor while getting his lust on. Somehow it's the perfect blend of horrific, beautiful, and cheesy - which is what you could say about this entire film. If you've never seen it, you must. This scene is just one of many incredible and weird moments in a movie that brings the Arthurian legends to life by combining a Martin Scorsese-esque flair for intimate violence with Heavy Metal-ish concept design (Boorman did create Zardoz after all). What I'm trying to say is that this is basically the most awesome movie ever, if you like swords, magic, and, um, swords. With magic.
Excalibur via IMDB