This is the form
Karl Heisenberg takes when he engages in combat directly with
Ethan Winters, after he progressed through his factory and dismantled his operation with the help of
Chris Redfield. During the battle, his production line is destroyed which enrages him to the point where he stopped at nothing to eliminate Ethan - his ultimate goal was to destroy
Mother Miranda but this would be cut short due to his destruction.
Karl was indeed one of the most powerful of the four leaders and the most gifted. He appeared to have no physical or mental disadvantages and used his electromagnetism abilities to control metallic objects and powered equipment. During his mutation, he pulled an extreme amount of magnetic material onto his body, first covering every inch and then augmenting it with all manner of machines and parts - his body was torn apart and stretched to extremes and was held together by bits of skin, bone, muscle, cables and metal. From a distance his former human body could be seen through the middle of his new form, with the majority of it now being made up of parts.
Nerves, blood vessels and other internal bodily structures could also be seen throughout his new body. Interestingly, his face is still a prominent part on the front of his new body, albeit disfigured and enlarged by machine parts. As weapons, he constructed a set of enormous mechanical sawblades which appeared to be hydraulic, but also used gear systems in order to move. There also appeared to be a lot of parts from vehicles on his body - from several belt driven motors and to wheels with rubber tyres. The remains of a partially crushed car seemed to form his bottom layer.
The haphazard form is probably just down to a lack of quality resources and time - as he took the action in his scrapyard and within a few moments. Given more time and better resources, it is likely that he could have given himself a much better and more powerful form.
Mentally,
Karl appeared to be still very much himself, although he was extremely enraged and so his aggression was at maximum - although he still made small jokes here and there. However his new form also looked incredibly painful and it was unlikely that he would ever be able to revert to his prior self due to the extremity of the mutation.
Ultimately, he was bested by
Ethan Winters who was provided with a weaponised machine which had been 'liberated' from
Karl's factory by
Chris Redfield sometime earlier.
Karl attempted to separate Ethan from the machine by reconfiguring his body to produce an enormous vortex above his body which sent objects and scrap metal flying around in a tornado. While initially successful at this, Ethan managed to catch onto the machine while it was also flying through the vortex, re-board the machine and defeated
Karl.