Heather's father (Bruce Campbell) barfs up the black blood of the witch, and a twig while waking up. He rushes to the school just in time to bring Heather out of her trance like state. Heather kills the head mistress and teachers with an ax. The school is then burned to the ground.
The head mistress and teachers were actually the witch sisters from the story. They needed three new witches to perform a ritual that would let the spirits from the woods take over the bodies of the students.