The characters change into formal kimono with the expectation that they’re going to see the daimyo, then head off to the palace. Along the way, they discuss the cult and how they seem to be intertwined with the city leadership. Saeko points out the symbolism of the names of the cult’s leaders — Raven, Cricket, Cicada, and Pheasant — and speculates that someone in the Daimyo’s inner circle must be associated with the cult.
When they arrive at the palace, the characters are ushered in, but not to see the daimyo. Instead, they are taken to see the daimyo’s brother, the city manager, Fujiwara Juro. As they approach his office, the door slides open and both Juro and the Golden Hornets' big boss, Suzukio Ichiro, step out. They bow deeply to each other, and then Ichiro turns to leave. Kumiko can’t hide her surprise, and she tries to rile Ichiro, but he simply smiles and walks past them.
Juro ushers them into his office, and they fill him in on what they’ve accomplished. He’s keenly interested in the activities of the Eaters of the Dead, as he sees them as an existential threat to the city. Kumiko was hoping that this meeting would result in a joining of forces between the two han, but after seeing the depths to which the Golden Hornets are entwined in local politics, she all but gives up.
Nevertheless, Kumiko tries her best to be diplomatic. Unfortunately, she fails horribly, and Saeko has to step in to save her from making an enemy of Fujiwara. Kumiko explains that they characters want to keep doing what they’re doing the way they’re doing it without interference from the city. She also explains that they want to disentangle themselves from conflict with the Golden Hornets and asks Juro to help facilitate a treaty. Eventually, he warms up to them and gives them his blessing in ferreting out the cult.
He does, however, warn them to stay out of Suzuki-san’s way. As he’s an upstanding and powerful member of the community, he can’t have them continue to interfere in his business. Kumiko suggests that the Golden Hornets should stay out of their business as well, and Juro tells her that he’ll see what he can do as he shows them out.
On their way back to the inn, the characters discuss the fallout of the meeting. Kumiko feels sympathy for the plight of the urokobito, so she declares her intention to help rebuild the Yellow Lantern district.
After a brief rest, the characters split up. Miyo decides to investigate the Raven’s notes that they found in the underground caverns. She visits the library and several mages. The more she learns, the more she is horrified by what she finds. The other onmyoji she consults with are even more horrified. It turns out that the Raven has developed a blood magic version of Raise Dead that turns the victim into a jade ghost — a potent undead that is bound to a jade statue that gives it immortality in return for stripping it of its freedom. Worse, the undead ninja that they had encountered seem to have willingly partaken in the ritual that creates them.
Saeko decides to investigate the scented notes. She spends the better part of the day reading through them, and realizes that they are primarily love notes between someone called Tomoe and Yasu, the chūnin of the Mist Tigers that they’d encountered previously, and who they thought they’d killed. She asks Asami about Tomoe and finds out that she’s the jonin of the Mist Tigers — the local guild leader. As she reads through the notes, she also realizes that the handwriting belonging to Yasu is the same that of the Cricket.
While Miyo and Saeko are investigating, Kumiko and Asami hire a number of urokobito to help clean up the Fukuda theater in preparation for the Festival of the Banners. She puts out the word on the street that anyone put out of a job by the fires in the Yellow Lantern district is welcome to work at the theater. She promises honest work and fair wages. While she’s happy to see the work being done, Kumiko doesn’t want to supervise, so she promotes a promising young urokobito named Hasegawa Konoye to foreman and leaves him to run the cleanup.
After dinner, the characters reconvene at the Fragrant Fern and then quickly turn in for the night.
Work on theater and preparation for the Festival of the Banners continues. Teams of happy urokobito laborers spend their day building pinwheels and fashioning koi banners. Kumiko hires guards for the theater, after she notices that the presence of so many urokobito in the Dancing Fans district seems to be drawing stares from the locals.
Odo shows up and informs them that the Golden Hornets have put out a contract on them. Apparently, their meeting with Fujiwara Juro the day before didn’t buy them any leeway with Suzuki Ichiro. While the urokobito continue their work at the theater, the characters decide to talk to Mitsuhide about the jade figurines that they recovered from the Cricket’s lair.
As they cross town to visit the Shrine of the Frog King in the Chrysanthemum District, they run into a group of adventurers looking to collect the bounty on their heads: a spear-carrying ninja, a hanyo shugenja, a demure onmyoji, and a burly ninja. They are in the middle of the crowded Southern Winds Marketplace when the ninja points to them and shouts, “there they are!”
Saeko is concerned about fighting in the middle of the market, with lots of civilians wandering around, so she opens with hypnotic pattern. Dozens of peasants stop in their tracks and stare out into the distance as they are transfixed by Saeko’s illusion. The rival clan’s spear-carrying samurai and shugenja are also transfixed, so their onmyoji returns fire with ice storm. All of the transfixed peasants are shaken out of their revelry, and they run screaming. Mass panic ensues.
With two of their members out of commission, the rival clan puts up only a modest fight. Saeko slaps manacles on the shugenja, and the rest of the group quickly takes out the onmyoji and ninja. They tie them up, and Saeko stabilizes their downed members. Curious peasants watch from afar, and it doesn’t take long for the city guard to show up. Two ashigaru warily point spears at the characters as they explain what transpired. They successfully persuade the guard not to arrest them, but to arrest the rival clan instead, and then they continue on to the Shrine of the Frog King.
Once they reach the shrine, they are healed up by Mitsuhide and his new crew of shrine maidens. Miyo, Saeko, and Mitsuhide investigate the jade statues, and determine that, to destroy them, they’ll need to cast remove curse on each one, and then inflict a modest amount of damage. One of the shrine maidens casts the spell, and they destroy the first statue. It will take six days to destroy them all, so they promise to return each day until they’ve all been ground to dust. Before they leave, Mitsuhide gives each member of the party a healing potion.
Next, the characters talk to Watanabe Isako, the captain of the guard, and ask to be deputized. They want official sanction for their cult-hunting activities. She considers for a moment, and then grants their request. Then they ask to interrogate the prisoners that attacked them in the marketplace. She considers for a moment and then denies their request, citing the sub-optimal results of their last interrogation.
Before they leave, Kumiko asks for a recommendation on where to buy magical armor, and Isako points her to her favorite armorer in the city. On the way back to the theater, Kumiko stops by and buys a set of magical armor.
The characters then spend the rest of the day planning for their display at the Festival of the Banners.
Work continues on the theater and the display for the festival. The characters stop by the Shrine of the Frog King to destroy another of the small jade statues.
Eager to make a good impression and guarantee a large audience for Saeko’s performance at the theater later, the characters head to the river and start handing out koi kites. With the assistance of few of their urokobito workers, they manage to put on a big display and attract a lot of attention.
Mid-morning, though, everything goes pear-shaped. Clouds begin to materialize over the city, blotting out the sun. A cold, brisk wind begins to whip through the air and the temperature drops about ten degrees over the span of a minute. People begin bundling up, bracing themselves against the wind.
Rain begins to fall - a slick, black rain, and people begin to panic. Though disturbing, it doesn’t seem to be having any effect on those on which it falls. However, after a few more moments, the river rises up in a great black wave, and three young shadow dragons — one red, one green, and one black — emerge from the fetid water.
The three dragons let loose on the crowd with necrotic versions of their normal breath weapons. Whole families are destroyed by blasts of necrotic energy. At this point, mass pandemonium erupts, and the dragons fly off into the city: the red toward the Yellow Lantern district, the green toward the Chrysanthemum district, and the black toward the Palace district.
The characters briefly debate about which dragon to chase and decide that the Yellow Lantern district has suffered enough. They sprint across the city, following the chaos left in the dragon’s wake. They cross into the Yellow Lantern district, winding their way through the narrow alleys of the urokobito slums, and are stopped in their tracks just before crossing a rickety bridge that spans one of the tributaries of the Nagara river.
A monstrous eel has been corrupted by the dragon’s tainted energy and has sprouted tentacles and a beak. It slithers onto the banks of the stream and menaces the characters. They are disgusted by the creature, but have little trouble fending it off.
Still, they cautiously cross the bridge, unsure of what else is going to pop out at them. Just as they reach the halfway point, a man comes sprinting around the corner screaming unintelligibly. He trips and falls just as two severed heads come flying around the corner after him. The heads are hovering four feet off the ground, with their spines dangling below them. The man grabs his head and screams again as it tears cleanly off his body, joining the other two rorukokubi. The three flying heads turn to look at the group.
Horrified, the characters nonetheless press forward and quickly dispatch the flying, undead heads, eager to reach the dragon before it can inflict even more damage on the city. They continue to run through the narrow alleys and finally hear the sounds of conflict in the distance. Saeko is the first to spot the dragon — it is in the middle of a small courtyard and is flanked by two yūrei inu. Bravely facing off against it are two city guardsmen and three urokobito; they are clearly outmatched.