Looking at the coach taking the children to Pleasure Island, it appears to be pulled by donkeys. Thus, little boys are kidnapped and changed into donkeys, losing everything they ever loved in life and on top of that, some are forced to pull the coach of the man who changed them in the first place and carry other children so that they can share the same monstrous fate as themselves. (In the book, this is definitely stated.)
On top of that, there's the fact that no one rescues the boys after they're robbed of their humanity and sold into slavery. Nobody even bothers to mourn for them, but we're supposed to clap and cheer because The Hero gets out OK. And the Coachman is never stopped, so he presumably goes on doing it to more boys. Honestly, it's pretty Egregious that the ending is even considered happy.
Fridge Logic: It would seem that the film intended that the Coachman, while evil by today's standards, look more like a 'force of nature' against the bad boys. Turning into a donkey is considered to be a just desserts for being 'bad boys'. Perhaps they meant it that way so the Coachman turns into a Karma Houdini. Still, if that's his job, Disney, WHAT WERE YOU THINKING!?!?
Probably, but it's still Disproportionate Retribution. It would teach a much better lesson if the boys actually got a chance to learn from their mistakes and find redemption. After all, that's all part of growing up—they're not evil people, they're just kids who don't know any better. And anyway, think of what it would do to the children's parents if they knew what the Coachman was doing. One boy even begs the Coachman to let him see his mother again.
Perhaps Disney went too over the top. Maybe back in the days where Pinocchio was aired, bad/naughty kids was considered a serious matter, so Disney decided to be as Anvilicious as possible or opts the Scare 'Em Straight path as in "If you keep being naughty kids, you will meet the Grim Reaper (here being the Coachman), and you are to be considered sinful and then be sent straight to Hell (Pleasure Island/turning to Donkey)". Remember that once sinners goes to Hell, they have no chance to enter Heaven again. Needless to say, Disney might've gone over the top...
Alternatively, Pinocchio was supposed to represent that "Got a chance to learn from mistakes and find redemption", while the rest were considered those too late to repent (and again, once God says you're not welcome in Heaven and your only place is Hell, beg all you like, but God won't let you repent, saying you got your chance in your whole life, but squandered them, it's just too late). It just means Disney just chose to save Pinocchio... while damning the rest with no chance of redemption. Again, I repeat... WHAT WERE YOU THINKING!?!?
And the Coachman is a Karma Houdini. For all we know, he could still be turning kids into donkeys and selling them off to the circus, salt mines, etc.
And we never do find out what happened to all the boys who were turned into donkeys. Most of them probably spent the rest of their lives as donkeys!
Remember near the beginning when Pinocchio touched a burning candle? What if Geppetto hadn't been there to put out the flame on his finger?
The book answers that one. The finger would have burned off, and Geppetto would have had to make a new one. Such a finger (or foot in the book) would probably be paralyzed and numb for a while as Pinocchio's circulation rebuilds the tissue in the cell walls.
I don't know about you, but I always got this weird and creepy sense that the Coachman was an allusion to pedophilia and child trafficking. That's what always crept me out about this whole operation. I mean, Pleasure Island??? *Shudder*
When Foulfellow asks, "What about the law?", Coachman assures him that there is no danger of that because THEY NEVER COME BACK AS BOYS. He also carefully prevents ones that still talk from getting away. Does this mean that Pinocchio, the first to come back as a boy, thanks to his conscience, had the potential to send all the king's horses after The Coachman?
I'm going to tell myself that's what happened after the end of the movie. It's the only way I can sleep at night.
This would make good Fridge Brilliance; after all, it wouldn't count as a good ending for nothing if it weren't for this line.
Pinocchio's father is really old (old enough to be his grandfather if it's worth guessing, but we're still unsure) and is most likely to die as soon as he reaches puberty. It's worth noting that this is a famous fan theory, having gen fics depict Pinocchio as a teenager, coping or witnessing his father's death.
When Pinocchio returns as a real boy, he asks his father why he's crying. Gepetto doesn't seem surprised to hear his voice, just tells him he's dead, actually insists on it when Pinocchio tries to convince him otherwise, and asks him to lie down. This implies that Gepetto's been hallucinating in his heartbreak and thinks he has heard Pinocchio speaking to him already. The broken way he asks Pinocchio to lie down suggests he just wants his mind to stop playing tricks on him and let him grieve.
It might actually be the beer in particular that causes the children to transform into donkeys, given that Lampwick was probably the last of his batch to fully transform, and Pinocchio stopped drinking when he saw his friend's donkey ears sprout. Pinocchio only partially transformed because he didn't drink enough.