Meanwhile, Rachel is getting off a monorail train, while being shadowed by two thugs. She notices one and threatens him with a taser. He runs in fear when he sees Batman beating up the second thug. As Rachel turns she screams at the sight of Batman.
He produces photographs compromising Judge Faden and then disappears as a police officer shows up. The news the next day of a 'Batman' has the whole city talking. Rachel and the D.A.'s office decide that there is enough evidence to put Falcone on trial despite it been given to them by a vigilante.
Alfred wakes Bruce up at 3:00pm in the afternoon, despite Bruce's pleas for more sleep, and then frets over the bruises and injuries that he has taken the previous night. He informs Bruce that he must live the life he would normally in public in order not to raise suspicion - doing such things as drive exotic sports cars, date movie stars, buy things that are not for sale, etc.
Earle is informed that a Wayne Tech Enterprise weapon, a microwave emitter, has been stolen from one of their cargo ships. The emitter is another military weapon, which uses focused microwaves to vaporize an enemy's water supply.
Bruce takes Alfred's advice quite to the extreme. His first night, he attends a party at a hotel with two female escorts, who almost get Bruce kicked out by bathing in the decorative fountain. Without hesitating, Bruce gets out of the situation by writing a check and purchasing the hotel on the spot.
There he meets Rachel for the first time since returning from China. Although he tries to convince her that the way he is acting isn't really him, she tells him that "it's not who you are underneath, but what you do that defines you."
Falcone has cut his wrists in prison to bolster his insanity plea and enable a move to Arkham Asylum. Dr. Crane is brought in to assess his "insanity". Once they're alone, Falcone demands that Dr. Crane move him or he will tell the police to have a closer look at the drugs Falcone has been trafficking for Dr. Crane.
Dr. Crane asks Falcone if he wants to see the mask he uses in his experiments at the Asylum, which he says the patients can't stand. He pulls a burlap-sack mask out of his briefcase. He releases gas from his suitcase and puts on the mask, which acts as an air filter.
Falcone screams with fear at the hallucinations caused by the gas. Dr. Crane is next seen leaving the room with his masked stored away, while Falcone's screams can still be heard. Dr. Crane tells the warden that Falcone isn't faking and should be moved to the Asylum.
The following night Batman visits Gordon and tells him that only half the drugs brought in on Falcone's ship were to be sent to the dealers. He and Gordon conclude that it would help to interrogate Flass, who Batman identified at the docks making his escape. Flass is pickpocketing money from a food vendor on the street while being served falafel.
As he walks away into a narrow alley, he springs a trap and is flown upside-down to the rooftops, suspended from Batman's grapple cord. Threatened by Batman, Flass tells him about the bear and rabbit shipments, that the rabbits make their way to the Narrows, and that there is some other substance hidden in the rabbits. Batman returns Flass to the ground and disappears.
Meanwhile, Rachel's boss, the district attorney, is shot and killed by an assailant disguised as a police officer when he finds Wayne Enterprises' missing microwave emitter in one of Falcone's containers.
Batman makes his way to the Narrows and finds an apartment stuffed with cuddly rabbit toys stuffed with the drugs. At that moment Dr. Crane and two of his men enter and Batman hides. At Dr. Crane's orders, the thugs douse gasoline around the apartment. Batman comes out of hiding and beats the two thugs.
Dr. Crane, wearing his burlap mask, emerges and gases him with the same gas he used on Falcone, using gas cylinders hidden in his shirt cuffs. Batman falls helplessly to the floor and scrambles around hallucinating bats and his parents' death. Dr. Crane douses him in gasoline while taunting him. He then lights a cigarette lighter and throws it at Batman's chest, causing his suit to burst into flames.
Batman throws himself out of the window into the rain swept streets of the Narrows and hits the street with a thud. Desperately rolling around he puts out the flames, to the shock of the on-lookers, and then stumbles about trying to get his grapple gun. He fires the gun upwards and is carried to to a nearby rooftop. From there he grabs his communicator and calls for Alfred to help him. He's still suffering from the hallucinations.