So, Mad Hatter's grand scheme begins to feel a bit of Bat related tension, so he tells the Tweeds that they're going to need to take out the Batman. How are they going to find him? Well, Hatter has essentially created a network of spies, all those who are wearing his hats (without knowing) are essentially a new pair of eyes for him, so someone is bound to see Batman somewhere. Clever.
A little more of Hatter's back story comes up, he starts taking his would be crazy pills, his hair starts falling out, and he starts getting creepy desperate with his would be Alice, to the point where all his friends start to think he's a freak. He becomes secluded and starts to go a bit nuts. It takes the thumping noise of his pet rabbit to drive him over the edge, and when his parents find him covered in blood, with a dead rabbit, they send him to the Arkham facility for youth.
Elsewhere, Batman gettin' some booty, Batman gettin' some booty. So, apparently Natalya takes the fact that her boyfriend is Batman pretty well? As she comes into the Batcave, to get more booty, apparently, then Bruce flies her in the Batplane to her recital. Turns out though, one of Hatter's... hat... guys... sees the Batplane, which alerts Hatter. Once the crazy tea sipper starts to watch the feed, he notices Natalya, and thinks she's the perfect woman for the part of Alice. Uh oh.
So, Hatter calls in all his mind controlled slaves for a dress rehearsal of whatever show he's putting on. Turns out it's a recreation of Alice in Wonderland, because, you know, that's his thing. At the end of it though, Hatter gets a bit annoyed that it isn't the real show, and demands all his slaves to just go drown themselves in a river... see, here's the thing, it's a lot of people.
Elsewhere, Gordon contacts Batman to update him on the whole Hatter situation, then they both get notified of the bodies in the water, the hundreds of bodies. Shit just got real!