Ha! It's ok.....I just had a flash of inspiration and googled my vague notion.....Film was called Wizards (1977) if you can see it , see it, it's funny as fuck....but I may have imagined the giant dick balloon.
(Was called 'War Wizards' in the US)
Reading through it now, I remember how chilling it was in places too.
http://www.ralphbakshi.com/films.php?film=wizards