As the party stands outside the late Ploppy the Jailer's quarters 
discussing their options, they hear a distant cry, then another, then a
crash of some kind.  Moments later, there are more screams, then a loud 
explosion.  This all seems to come from the very hallway down 
which Keldorn has just said his warriors have been housed.

Eagle:  What was _that_?
Ajax:  You mean "who." (he draws his sword and sprints down the hall
  toward the ruckus) LET'S GO! 
Autumn:  Wait up! (she follows)
Greythur:  (fingering the wooden disk around his neck, he follows as well) 
  Fharlanghn preserve us!
Alenniel:  (sighs and follows)

The rest fall into line behind them and rush headlong down the corridor
which Keldorn indicated.  You dash down it for some three hundred feet
before any signs of a conflict become evident.  The walls to either side
are blackened in places, and along this main hallway and down two branches
to your right you see dead and injured dwarves as you pass.  Ahead is a
concentrated knot of stout warriors crowding forward as fast as possible;
over their heads, and still some distance away, you can make out Ozzy's
form.  Oddly enough, he is a uniformly dark red from head to toe. 

Ozzy:  (staring intently at something in his outstretched hand, he steps 
  forward-- and abruptly disappears, as if he'd walked through a door-
  way)
Ajax:  (just as Ozzy vanishes) OZZY!!  Stop right where you are, Elf!

Alas, it is too late.  Confusion spreads among the dwarves, and you manage
to weave your way through them to the point of Ozzy's unusual
disappearance.  Whether he is truly gone or merely invisible is difficult
to determine immediately, as the ambient torchlight precludes the use of
infravision for the moment. 

Autumn:  (stomping around angrily) That fink!  My spellbook, my ball, my
  bag... all gone!
Greythur:  Wait... what's this? (he picks up a large sack laying on the
  ground and opens it) Oh my.  I think you should see this.

Inside are a number of familiar items: the two spellbooks, the bag of
animals, the iron ball, Tasencia's wand, Ozzy's enchanted shield, and
every other missing article... except for Tasencia's bracers and placard.

Tasencia:  What is the meaning of this?  Most perplexing.  He has clearly
  gone through the trouble of returning our goods, and yet he still steals
  from me?  If he had only tried discussing the matter with me, I'm sure
  we could have come up with a reasonable solution.
Keldorn:  (looking about at the carnage around him, marvelling that a 
  single Elf could've caused it all) I think reason has been far from his
  mind, as of late.  And now he has eluded my grasp... blast him!
Ajax:  (sadly notes that most of his color-changing potion is gone) At
  least we know how he was sneaking around so well.  By turning black
  with this stuff, I bet even a clod like Ozzy could make himself scarce
  in a convenient shadow.
Autumn:  (scrutinizes each of her previously-stolen possessions) I know
  I said before that I wouldn't care if he left so long as he didn't have
  my stuff, but I'm not so sure about that anymore.
Tasencia:  Indeed.  In one way or another, it seems only fair that he be
  brought to justice.
Eagle:  (dismissively) Ah, take it easy.  You and your justice.
Alenniel:  Either way, it seems the point is moot.   He's gone, and now we
  _really_ don't know where he is.
Ajax:  (sheathes his sword and leans against a wall with a sigh) I just
  can't believe it... Ozzy's gone.