The episode starts in unfamiliar surroundings.   However, it does not appear to take place within the present timeframe.  A man is scaling a sheer rock wall.  At the moment, we don't know who this is.  He reaches the top of the cliff and sees a pillar of light.  When the light fades, a girl in a flower-print kimono holding a small paper wind-catcher stands before him. 

Back in the present, Folken and the Leopard sisters are aboard a floating fortress
Folken: "Did it go well?"
Naria: "Yes.  All our training was completed successfully."
Folken: "I see.  Good girls."
Naria: "What of the Sorcerers who accompanied us here?"
Folken: "They've come to take Dilandau back with them.  The Sorcerers hate me.  I'm not sure why."
Eriya: "They're jealous of you, Lord Folken."
Naria: "I hate the Sorcerers."
Folken: "No, you mustn't say such things about the Sorcerers.  Originally, I was a Sorcerer as well."
Naria: "Forgive us."
Eriya: "Lord Folken, we missed you..."
Considering how the girls are presently sprawled across Folken's lap, it's apparent that they think more of him than just their superior...
Naria: "Thinking of the day we would see you again was what sustained us."
Folken: "I'm sorry, you two.  Lend me your strength."
Eriya: "We understand.  Our bodies and our souls are yours, Lord Folken."

Back at Dryden's ship...
Dryden: "That was tough!  It took a while to figure out that it's written in the language of the Mystic Moon!"
Hitomi: "The Mystic Moon?"
Attendant: "Young Master!  Enough is enough!  Zaibach has their eye on you!  Nothing good will come of this."
Dryden: "Go home."
Attendant: "Heh?"
Dryden: "I've decided to go to the Mystic Valley.  Take this ship back to Palas."
The rat-faced attendant spazzes out at this
Attendant: "W-what?!  How will I explain this to the Master when I return without you or any cargo?!"
Dryden: "I'll write him a note.  If I tell him I'm with Princess Millerna, it'll be okay."
Millerna: "Dryden!  I..."
Dryden: "You're coming.  Allen is, after all."
Allen: "Why should I go?"
Dryden: "Because you have to!  Your father threw away his home, his fortune, and his family to find the Mystic Valley.  It's a famous story in Asturia.  Heck, even I know it."
Allen looks positively ticked at Dryden ^_^*
Hitomi: "Allen's father?"
Van: "I want to go, too.  The Mystic Valley is the homeland of the Draconians.  I want to see the source of the blood that flows in my veins.  And the bond between that land and Escaflowne."
Dryden: "Well, damn...  Is it just fate that's brought together all these people who are tied together by the Mystic Valley?"

The group departs from Dryden's ship on Crusade. Dryden reads Allen's father's journal to the group
Dryden: "'Year of the Crystal Northeast.  Green, 12th moon.  I am bound for the dark continent of Asgard, upon which no man has set foot.  Yes, I am certain that the Mystic Valley lies there.  There I am sure I will find that for which I have searched these long years.  The power that works miracles.  The power of Atlantis.'"

A ship flies through stormy weather.  At first glance, it looks like it might be Crusade.  However, the ship and crew are unfamiliar
Helmsman: "Boss, the helm's not responding!  We'll never be able to make it through a storm like this!"
Crewman: "Bad news, Captain!  The energist ain't cooling down!"
Captain: "Damn it!  It's the Draconians' curse!  Man was never meant to come into these waters.  Okay, you bums!  Turn us around!"
Crew: "Yessir!"
However, someone holds a sword to the captain
Man: "That's not what we agreed.  Stay on this course.  I paid you what you asked for."
Captain: "The ship won't hold together, you fool!  Even you have to know that!"
Man: "You sold me your lives."
However, the ship is struck by lightning and falls into the sea.  When day breaks, the man is floating in the ocean alone
Man: "I wonder how many days passed...  In that hazy state of mind, that girl's voice... her face... returned to me.  And then... Asgard appeared before me.  The gods guide me.  This is my destiny."
Considering the guy has suddenly become introspective, it's safe to assume that he's probably Allen's dad, recounting his journal
Allen: "Destiny?"
Yup.  This is a recounting of the journal.  Since I really don't want to refer to him as "Allen's Dad", his name is Leon, to prevent any further confusion.  Now, he is wandering the desert on the Asgard continent
Leon: "A cruel twist of fate brought about that meeting in my youth, as well as our sudden separation.  I have come here to ascertain my feelings for the girl who is etched so deeply in my mind.  Everything is in the Mystic Valley.  Everything I am searching for."
Allen: "You must be joking!"
Flash back to the present for a moment
Allen: "He abandoned his home and his family to find some woman?!  Pathetic."
Dryden: "Sounds like an interesting guy."
Allen: "What?"
Dryden: "He's a lot better than my old man, who only knows how to count money.  I like the way he lived his life."
Hitomi: "Allen..."

And now we see... railroad tracks?  We appear to be back on earth.  Amano and Yukari are at Hitomi's house inquiring after her
Amano: "There's still no sign of her?"
Hitomi's Mom: "No, I'm sorry.  It's not your fault.  Don't worry."
Yukari: "I still dream about her.  I'm standing at the station on my way to school, waiting for her like I always do, and Hitomi comes running up to me and says 'good morning.'  But then I always wake up."
Amano: "Uchida..."
That's Yukari's last name, by the way
Hitomi's Mom: "I dream about Hitomi, too.  She's fine.  It may be hard for her sometimes, but I know she'll pull through."

Back on Gaea, on Crusade
Teo: "Can't see anything out there."
Kio: "Nothing but ocean as far as the eye can see."
Teo: "Sarge!"
Gaddess: "Keep going straight ahead.  Dryden said this is the right course."
Teo: "Can we trust that guy?"
Gaddess: "The Commander said to do it, so we're doing it!"
He opens a pipe and yells into it
Gaddess: "Pyle!  How's it coming down there?"
Pyle: "It'll take a while longer.  It's gonna take some time to install the control chamber parts we took from Dryden's guymelefs."
Mechanic 1: "Damn it, this screw doesn't fit!"
Apparently, they're repairing Scherezade from its battle in Freid
Mechanic 2: "Hey, don't break it!"
Mechanic 1: "I know, I know!"

Back to the reading of the journal
Dryden: "'Blue, 16th moon.  Driven snow and jagged rocks block my path as if to test those who challenge the mystery.  But there...'"
Back to the flashback reenactment.  Leon stumbles upon a lit cave
Leon: "...I met an old man.  There was one other who believed in the existence of the Mystic Valley and was in search of it.  When I asked him his name, the old man answered, 'Isaac'."

And now we're back on earth at Hitomi's house...
Hitomi's Mom: "I've never told this to anyone, but maybe it's best that I told you two.  There's a story that my mother told me when I was little.  She was just about Hitomi's age.  She says that on her way home from a summer festival, she was bathed in light, and she found herself in and unfamiliar land."

And back to the Allen's dad flashback
Leon: "What Isaac told me was most interesting.  He, too, was looking for the Mystic Valley, in search of the mystery of Atlantis.  Even more surprising was Isaac's claim that he comes from the Mystic Moon, just like that girl!"
So who is this mysterious bearded Isaac guy?  Eh, you'll find out soon enough :P  Back in reality, everyone acts shocked at the revelation
Hitomi: "The Mystic Moon?"
Dryden: "Just like you."

And back on earth, Hitomi's mom shows Amano and Yukari a photograph of a young girl in a flower-print kimono holding a windcatcher
Amano: "Is that..."
Yukari: "Hitomi?"
Hitomi's Mom: "My mother."

Elsewhere, Hitomi is having an out-of-body experience.  She sees Leon climbing the cliff
Hitomi: "That's... That's Allen's father."
She sees the pillar of light in an reenactment of the beginning of the episode
Hitomi: "That's...!"
The light fades, and the windcatcher girl is standing there like before
Hitomi: "That girl...!"
The girl turns to face her.  She looks exactly like Hitomi, except with long hair

Hitomi: "That girl... She's..."
Leon walks up to the girl, kneels, and takes her hand.  The Mystic Moon rises behind them.  Day becomes night, and the two have exchanged stories
Leon: "I can't believe it.  You're from the Mystic Moon...  I left on this journey to leave all of my ties behind.  But when I look at you... at your eyes, I think that maybe it was all in vain.  You'll forgive me, won't you?"
The girl says nothing, as the pillar of light forms around her again.  She floats into the air, and Leon reaches out to her, mimicking Amano and Hitomi from the first episode in a similar situation.  The light vanishes, as does the girl.  However, there is a quick flash to the girl again, except looking much older
~Girl~: "Hitomi."
Back in reality, Hitomi reacts to this
Millerna: "Hitomi?"
Hitomi: "Grandma!"

And to flip the scene yet again, we are now in Zaibach
Sorcerer: "General Adelphos, we have come to ask your permission to take back Dilandau."
Adelphos: "A Sorcerer asking for permission?  He may be under my command, but you Sorcerers were the ones who sent him to me in the first place.  May I ask why?"
Sorcerer: "We've received word from Strategos Folken that he is ill."
Adelphos: "That monster is sick?  Will wonders never cease."
Sorcerer: "Once he has recovered, we will return him to you."

However, maybe "sick" isn't quite the best description for little Dilly.  Aboard a floating ship, he's screaming and writhing like crazy, strapped to a table
Sorcerer 1: "He's become unstable."
Sorcerer 2: "What is the cause?"
Sorcerer 1: "The fate alteration experiment wasn't completely successful.  We will keep this from Folken."
Sorcerer 2: "Very well."
Dilandau: "Shesta!  Gatty!  Darret!  Where are you?!  Don't leave me alone!"
Sorcerer 1: "He'll be in danger if this keeps up.  Put him to sleep."
The Sorcerer holds up a mean-looking needle
Sorcerer 1: "Once we return to the homeland, we will perform another fate alteration."
And Dilandau, obviously, is not too thrilled about any of this

And back in Folken's neck of the woods...
Dornkirk: "Asgard?  They are heading for the Mystic Valley."
Folken: "The Mystic Valley?  The one of legend?"
Dornkirk: "Yes.  The homeland of the people of Atlantis, the Draconians.  So, they've found it..."

To switch the scene yet again, we're back on Crusade, heading into stormy weather
Dryden: "'White, 3rd moon...'"

Leon: "Isaac and I have come upon a moor shrouded in thick fog.  The Mystic Valley must be just beyond this place.  But Isaac disappeared, I know not when.  Were we separated by this thick fog?  Or could it have been...  No.  I should just focus on reaching the Mystic Valley.  If I can reach the Mystic Valley, I will solve the mystery of Atlantis!  If I do, I'm sure I will be able to see that girl again.  If I could only see her, I..."

Allen: "I've heard enough of this!"
Hitomi: "Allen!"
Dryden: "Running away?  It's interesting that this could get a rise out of a Knight Caeli."
Allen: "You know, I don't think we're going to be friends."
Dryden: "Ha!  That's good to hear!  I'm not interested in being your friend."
Hitomi: "Dryden!  That was cruel!"
Hitomi gets up and goes after Allen
Millerna: "Hitomi!"
Dryden: "Looks like another babe hates me."
Hitomi finds allen intently examining the wall, feeling depressed
Hitomi: "Allen..."
Allen: "Hitomi?"
Hitomi: "Yes."
Allen: "I'm sorry you had to see that."
Hitomi: "That's okay.  I..."
Allen: "I'll never be able to forgive him.  I'll never forgive my father.  Not a man who abandoned his family."
Hitomi: "I don't believe that.  You kept your father's journal, right?  You could have thrown it away, but you didn't.  I think, somewhere deep down, you wanted to know about your father.  You're a kind person.  I don't think you'd be able to hate someone that much.  If you were really that cold inside, I don't think I, or any of us, would like you.  You want to forgive him, don't you?"
Allen: "Perhaps I was scared.  Scared of finding out that her really did abandon us.  Perhaps, deep down, I didn't want to accept that."
Hitomi: "Allen..."
Allen: "You'll forgive me, won't you, Hitomi?"
Ah, but we don't care about what's going on with Allen and Hitomi.  Back to Dryden and everyone else
Dryden: "Once we make it through this, we'll almost be there."
Van: "I'm going up to take a look.  You stay here, Merle."
Merle: "Lord Van..."
Van leaves and walks down the hall.  Farther down the hall, Allen approaches Hitomi, and they gaze at each other (this already doesn't bode well).  The ship shudders, and Hitomi is thrown into Allen's arms.  There is a minefield of floating rocks outside, and Crusade is having a hard time avoiding them
Gaddess:  "What the hell?  There's even levistones flying around out there!  Reeden!  Keep your eyes peeled!  If we crash into one of those, we're dead!"
Reeden: "Yessir!"
And, Hitomi finds herself in an awkward situation.  She loosens her grip on Allen and apologizes
Hitomi: "I'm sorry."
However, Van has conveniently picked this time to show up.  He sees the two holding each other and is kinda shocked.  Hitomi blushes, and Allen is oblivious to anything.  Thankfully, Dryden walks in and saves the day
Dryden: "There you are!  We should be there soon.  Let's go to the pilothouse."

Up on deck, the crew is doing what they can to avoid the rocks
Reeden: "Levistone ahead!  Hard to port!"
Kio: "Aye!"
Gaddess: "Hang in there!  It shouldn't be much farther!"
Kio: "Y-yessir!"
Suddenly, for no apparent reason, the fog clears
Dryden: "There's a clear patch!  The Mystic Valley is just ahead."
However, the Mystic Valley isn't all that impressive.  The ship emerges upon a snow-covered, barren mountain range
Hitomi: "This is the Mystic Valley?"
Van: "There's nothing down there..."
Dryden: "What?  That's impossible..."
Merle: "What's wrong?"
Dryden: "A page has been torn out!"
Pyle: "Sarge!  It's a Zaibach floating fortress!"
Sure enough, a floating fortress emerges from the fog as well
Soldier: "Asturian skiff spotted!"
Folken: "Good.  Naria.  Eriya.  Do you read me?"
Naria: "Yes, Lord Folken.  We're ready to go at any time."
Eriya: "We'll bring back your brother."
Folken: "I'm counting on you."
The Leopard sisters descend from the fortress and blast off towards Crusade
Naria: "Let's do it, Eriya."
Eriya: "I know, Sister."
Naria: "No doubt about it."
Eriya: "That's them all right."
Allen: "Damn!  They got above us!"
Gaddess: "Are they trying to force us down?  Pyle!  How's Scherezade coming?!"
Pyle: "Not even close!  We're not even halfway done yet!"
~Grandma~: "Hitomi..."
The vision of Hitomi's grandmother appears again
~Grandma~: "If you wish hard enough, your wishes will come true."
She holds up the pendant
~Grandma~: "I want you to have this, Hitomi."
Hitomi: "Grandma... Show us the way to the Mystic Valley.  Please, show it to us...  Please, Grandma..."
Dryden: "Not after coming this far... I want to see the Mystic Valley, damn it!"
Van: "Mother, what is it that you want me to do?"
Allen: "I can't die here!  I'll settle things with you once and for all in the Mystic Valley, Father!"
The Leopard sisters go in for the attack
Folken: "Van, what is it that you want to see in the Mystic Valley?"
Escaflowne's energist starts to glow, as does Hitomi's pendant.  At this point, the entire ship is engulfed in a column of light, which knocks the Leopard sisters' guymelefs away.  The light goes up into a circular gate that appears in the sky
Folken: "It can't be...  The Gate of Atlantis is opening!"
The light vanishes, and Crusade is gone