It’s a “fix-it” theory. It uses part of canon that I hate – the author (because that takes away free will) but that is kinda the point.
In the underworld they have made no secret of the fact that Henry was the author. I mean they had him writing everyone’s stories on Main Street for crying out loud.
The author can make people do things. Hearts can control people. Henry is also the ‘truest believer’ and therefore his heart is more powerful than most. What if Hades, seeing as he has the most to gain, got control of Henry’s heart. He is making Henry use his author powers to structure everything to his liking. For instance the whole “let’s trust Zelena and give her the baby” which is just pure insanity.
That would be why all the characters are acting so “out of character” because they can’t control themselves – they are all being controlled by the author, essentially spelled to go along with the narrative. If it’s Hades doing the controlling then that doesn’t explain everything, I mean Emma has been not exactly herself since long before the underworld but it would explain some of the more questionable recent choices. If it’s someone else, then the control could have started some time ago.
Yes that would be reveal akin to “and it was all a dream” but to be honest I think I would prefer that because at least there would then be some logic. The characters would still be themselves, because there would be a reason for all the craziness.