Original Wording

KLTPZYXM!: Mr. Mxyzptlk can use Phasing/Teleport. When he does, roll a d6 before moving him. On a result of 1, deal Mr. Mxyzptlk 1 unavoidable damage, place him in any unoccupied square in his starting area, and then move him normally.

Object Animation: Give Mr. Mxyzptlk a power action and roll a d6 for each opposing character that has zero or one action token, that is in a square 4 or fewer squares away to which Mr. Mxyzptlk has a clear line of fire, and that is carrying an object or adjacent to or occupies either a square of hindering terrain or a square that has an object. On a result of 3-6, give the character an action token.

Errata

Object Animation: Give Mr. Mxyzptlk a power action and roll a d6 for each opposing character that has zero or one action token, that is in a square 4 or fewer squares away to which Mr. Mxyzptlk has a clear line of fire, and that is carrying holding an object or adjacent to or occupies either a square of hindering terrain or a square that has an object. On a result of 3-6, give the character an action token.

When I use Object Animation, do I need to be able to draw line of fire to the characters holding the objects or occpuying the hindering terrain?
No. Object Animation draws line of fire to squares, not characters. Since the characters themselves are unimportant, LOF-wise, you do not need to worry about Stealth and other such game effects that would block line of fire to the characters.