I vote for displaced hunting behaviour. My female semi-feral does the same thing with all of her various toys (big furry pompoms are her fave). And being a flame-point siamese, boy can she YOWL, even when her cheeks are stuffed with her "prey". Cats are hard-wired to hunt and when they aren't able to fulfill that need due to confinement indoors, the instinct can transfer into some pretty interesting behaviours.
"To close your eyes will not ease another's pain." ~ Chinese Proverb
“We must not refuse to see with our eyes what they must endure with their bodies.” ~ Gretchen Wyler