The script can be read here but below is a synopsis.
The heroes are travelling through the Moon Forest at night to rendezvous with the Dungeon Master but decide to camp down with Presto conjuring an electric blanket to shelter from the gale. Dungeon Master approaches Hank and warns him that although his friends face jeopardy Hank himself will face the most difficult trial of his life.
While the other heroes sleep the Cloud Bears, Bo-Jama, Bom-Bam and Taka-Too, attempt to steal the heroes' totems but are soon overpowered and explain that they wanted the weapons to protect themselves from orc soldiers. Orcs then attack and the Cloud Bears and the heroes flee but Hank and Bobby are captured. Sheila turns invisible and follows their orc abductors. The remaining heroes and Cloud Bears escape into a tree-house colony via an elevator where they meet king Kamala.
The orcs have siege engines that attempt to cut the trees down so the Cloud Bears and heroes throw down plates of nuts and fruit onto their attackers which halts the felling temporarily.
Meanwhile Sheila overhears Hank telling his orc captors about firing an energy arrow as a flare to signal when to start a new attack on the Cloud Bears' colony, and that Venger need not worry. Oddly he seems quite cheerful and not at all reluctant about being coerced into it so Sheila presumes he is voluntarily working for Venger.
Hank returns to the Cloud Bear colony and explains that he and Bobby were captured but only he managed to escape. Sheila, who has followed him back, becomes visible and exposes him as a traitor. The others are astonished and suggest she is confused but Sheila tells them about the flare signal and challenges him to fire an arrow. Reluctantly he does so and seeing the signal the orcs below begin their attack, firing giant harpoons into the trunks so that the army can scale the trees.
The Cloud Bears begin chanting to the Cloud Spirit for help and a storm suddenly manifests with the subsequent torrential rain and lightning strikes halting the orcs' invasions.
Although temporarily safe from the orcs the heroes still have the problem of Hank's betrayal and consider a trail. Shadow demon, who has been spying on them, reports back to Venger who is annoyed that the orcs lost the battle and that the Cloud Bears unknowingly used their heart stones to summon a storm. In Venger's castle Bobby is strapped to a frame above a glowing pit, as a bargaining chip for Hank's obedience.
Hank chooses not explain his betrayal or where Bobby is and is expelled from the Cloud Bear colony. A sympathetic Taka-Too gives him her heart stone, saying it is Cloud Bear custom and that it will bring him luck.
Hank returns to the camp where the orcs mock him for no longer having any friends. Humiliated he walks away and meets the Dungeon Master who tells him that he is a traitor to himself for not following his courage and insight, regardless of Bobby being Venger's prisoner.
Hank returns to Venger's castle and glibly explains his failure. A displeased Venger threatens Bobby further by inching him down into the glowing pit to keep Hank obedient. Dejected, he leaves and throws the heart stone into the castle behind him, stating that it is useless as a good luck charm. The heart stone skids across the floor to Venger who cowers from it and commands Shadow Demon to dispose of it.
In the Moon Forest the orcs are attacking with an armoured tank whose spiked wheels allow it to be driven vertically up a tree. Presto tries to conjure something to stop the orcs but his hat becomes gigantic instead. Diana has an idea on how to escape by converting the elevator's casket into a hot air balloon using Presto's hat as the balloon and an oven to heat it. It works but Presto's hat is punctured by an arrow and looses altitude, skimming across the forest floor where the orcs try to grab it. Hank arrives, dispersing the orcs with energy arrows and hails down the heroes who are divided about letting him on-board. He instructs Diana to plug the hole with her javelin and guides the hot air balloon to Venger's castle, finally explaining why he betrayed them.
Hank and Sheila rescue Bobby from the castle but when Venger tries to stop them the Cloud Bears throw their heart stones through the windows at him, causing Venger to shatter and flee in a stream of crimson fragments. Hank had witnessed what happened when he discarded the heart stone Taka-Too gave him and knew how to defeat Venger.
Afterwards the heroes and the Cloud Bears fly off in the hot air balloon to confront the orcs. No confrontation is seen but it is presumed that the orcs are defeated as the next scene is in the Cloud Bear colony. A thankful king Kamala offers Hank the last remaining heart stone but he refuses, saying that the Cloud Bears may need it to protect them from Venger. Eric apologises for calling Hank was a traitor and Hank admits that he should have been more courageous.
Dungeon Master then appears with news of a possible way home, saying that a clue can be found in the Land of Blue Fire which is three days journey from the Bottomless Swamps, before disappearing again. An enthusiastic Eric jumps into the hot air balloon, seeing it as a way to cut down on journey time, just as Presto complains that he wanted to ask Dungeon Master to return his hat to its normal size. The hat shrinks and the tethered hot air balloon plummets with Eric hanging on and crying out for help, much to the amusement of his friends and Cloud Bears.