The Academy of Motion Picture Arts and Sciences, which presents the Oscars, initially said Cohen was invited to Sunday's event, but only as himself.
Telecast producer Brian Grazer finally relented and said Cohen could dress as the fictional Admiral General Shabazz on the red carpet.
The compromise was reached after Cohen used online video messages to secure permission to take part in Hollywood's biggest night of the year as the outrageous character from his upcoming film.
The New York Daily News said Seacrest, who covers entertainment for E! News, asked Cohen why he was carrying an urn with the late North Korean dictator's face etched on the side, prompting Cohen to reply in character, "It gave me the opportunity to bring my dear friend and double tennis partner Kim Jong Il."
Cohen then appeared to trip and cover Seacrest's tuxedo with the contents of the urn, the Daily News said.
"If someone asks what you are wearing, tell them Kim Jong Il," Cohen told Seacrest, referring to the ruler who died in December at age 69.
UsMagazine.com quoted Cohen as joking he himself was wearing John Galliano, the former Christian Dior designer fired after an anti-Semitic rant in a Paris cafe.
"The socks are from Kmart," Cohen said about his ensemble. "[executed former Iraqi leader] Saddam Hussein once said to me, 'Socks are socks, don't waste money!'"