The heroes, left in Squirk's trap, manage to free themselves by having Buttons use her telekinesis to jam it with a giant seashell, after which Pluma and Ruff turn into a whirling saw to cut their ropes. Once everyone makes it back to the surface, they find that Squirk has been busily flooding Dream Valley and that much of it is now underwater. In order to stop the villain, they come up with a trap.
Pluma turns herself into a prism and shins a rainbow into the water to draw Squirk's attention. When the octopus emerges, the heroes surrender to him and offer to obey him if he stops flooding Dream Valley. Once Squirk is busy considering this, a group of pegasi drops a large net — the same one Pluma used on the ponies earlier — on top of him and Crank. With the villains trapped, Buttons uses her telekinesis again to grab the stone and wrestle it away from Squirk. Megan takes it, hops on Wind Whistler and flies up into the sky, where she shoots the flash stone into the water to reverse the flood.
The water quickly recedes from Dream Valley, dragging Squirk and Crank along with it and out of everyone else's hair. Dream Valley is left devastated by the flood, but Megan uses the flash stone to restore it to normal and to repair Paradise Estate in the bargain. This done, she breaks the flash stone into pieces to prevent it from falling into evil hands again. Pluma and Gruff, after the former apologizes again for her earlier deception, thank the heroes for helping to free them from Squirk, and depart for their own home.
This episode contains examples of:
- But Now I Must Go: After helping the heroes defeat Squirk, Pluma and Ruff announce that they must depart for their own homeland and leave Dream Valley behind.
- I Surrender, Suckers: The kids and ponies pretend to surrender to Squirk's rule, in order to get him to drop his guard so that they can catch him in a net.
- Mega Maelstrom: When Megan uses the flash stone to clear away the flood, the water forms into a huge whirlpool as it's drained away. This proves strong enough to seize Squirk and Crank in its current and drag them down and away to an unknown fate.
- No Man Should Have This Power: Megan smashes the flash stone to pieces once Squirk is defeated and Dream Valley healed, reasoning that it's too dangerous to risk it falling into evil hands again.
- No Ontological Inertia: Averted when Squirk and Crank are defeated and flood waters subside, as Ponyland is still ruined from all the water damage and it takes the flash stone to restore it back to normal.Wind Whistler: Well done, Megan. Magnificent!Megan: Not quite done... yet.
- Uncertain Doom: It's unclear what actually happens to Squirk and Crank — the receding floodwaters drag them away into a maelstrom and down a hole, but their actual fate after that is unclear. It's not shown if they died, but they don't return to bother Dream Valley ever again.
- World-Healing Wave: Once Squirk is defeated, Megan uses rainbow beams from the flash stone to restore the devastated Dream Valley to its green and healthy self, quickly growing back plant life, restoring trees and fixing Paradise Estate.
