The movie, about dinosaurs that have "evolved" to be smarter, is a flashback recounted by Rex to a bird he meets at the beginning. Also the bits with the crows; Prof. Screweyes has always had an adversarial relationship with dinosaurs, it seems. As a matter of fact, the whole movie has a bird motif going through it—it's set at Thanksgiving, Cecilia has the last name Nuthatch, and one of the dinosaurs in Rex's flashback has what looks like a tuft of feathers on its head. Considering that the relationship between dinosaurs and birds was mentioned in Jurassic Park, which Steven Spielberg also produced, this may not be a coincidence.
Why does Louie's speech and hugging help Rex and the others change back into their "evolved" forms? Because there's a saying "Fear comes from the lack of knowledge and a state of ignorance. The best remedy for fear is to gain knowledge". Screweyes' Brain Drain pills have taken the dinosaurs' knowledge, and therefore, leaves them scared animals. So failing that, what helps them over come their fear? Love. Now that might sound clichéd, but there's another saying: "Perfect love casteth out fear".
At the end, Screweyes was consumed by the crows. The crows were his personal phobia. Screweyes was literally consumed by his fear.
Why does Screweyes just stand still with his arms outstretched when the crows come after him in the end, instead of trying to get away? He practically let them eat him alive!
As mentioned under Brilliance above, it was a combination of literally being paralyzed with fear and a Despair Event Horizon. Not only was he surrounded by crows—his deepest phobia—but he was also facing the more primal fears of loneliness and abandonment. His attempts to create fear had collapsed, and he'd rejected Neweyes' offer of redemption out of pettiness. That left him with nothing and no one, all alone and absolutely terrified in the darkness. Heck, Screweyes might have wantedthe crows to kill him.
Speaking of Screweyes... What happened to his circus after he's gone? The Fear Radio thing is still pretty much there, as well, if the Brain-Drain pills we saw in the movie weren't just a one-off thing, he may probably still had some lying around or even a recipe to create more (albeit, they would still have temporary effects though)... and who's stopping someone else to go and redo his circus under a new name?... or even manage to work the fear radio for it's own personal gain too?...
