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Welcome to a place that's more than it appears. Your goal here is to uncover that layer of mystery, which will eventually lead you to the source of the corruption here in the forest. If you've already been on the left path in the forest and received the quest from Spear Catches Thief to aquire the crystal, then you're in the right place. Otherwise, you may wind up having to make an extra trip here.
1 - Arrival
You'll emerge from the Great Southern Forest on this semi-destroyed pathway.
2 - Lost Spirits
Three Lost Spirits will materialize and immediately attack once you move down the pathway a short distance.
3 - Rock
Smash this rock to find some extra silver pieces and the possibility of a random essence gem (such as an Inferior Monk Gem or an Inferior Warrior Gem).
4 - Bamboo Cask
This trapped bamboo cask contains a pile of silver and will randomly produce a Charm Gem as well.
5 - Strange Creature
A strange creature will run across the grass to the southwest, alerting you that something sinister may be inhabiting this place.
6 - Innkeeper
As you first approach the main area of the inn, you'll talk to the Innkeeper. If you go through his dialogue, you'll notice something a little "off." Regardless of how strange the encounter may seem, with a successful dialogue check you can convince the Innkeeper to reveal his plans to put a stop to the Forest Shadow. If you don't succeed at the dialogue check, go chat with Henpecked Hou at area #7 first. If you're persistent, Hou will tell you to ask the Innkeeper about "the twisted servants of The Mother", which will prompt the innkeeper to reveal more... information.
Whichever route you chose, the Innkeeper and the other servants around the building will transform into their true form - some sort of cannibal creatures that have been taught by "The Mother" to gain power from human flesh. Once they're exposed, you'll have a few options available to you. If you're pursuing an Open Palm route, then you might as well just slaughter the cannibals (who are the source of the forest's corruption) and simply take the Temple Crystal needed to reach the Heaven where the Forest Shadow resides. Once you've spoken with the Forest Shadow, you'll have to return here and enter the Cannibal Caves at area #13 to finish off The Mother.
If you're pursuing a Closed Fist route, then you can offer to help the cannibals in their quest to destroy the Forest Shadow. Once you agree to his plan, the Innkeeper will hand over the Temple Crystal and promise you a half-year's worth of taxes as payment when you return. Once the Forest Shadow is dead, the Innkeeper will make good on his promise and reward you with a large sum of silver pieces and the Mother's Touch technique. If you don't care about the silver or the technique, you can still slaughter the cannibals when you return and enter the Cannibal Caves at area #13 to kill The Mother.
With the Forest Shadow or The Mother (or both) dead, you can return to Lord Yun in the Great Southern Forest to declare victory.
7 - Henpecked Hou
Hou's story is one of the better ones in the game, if you've been paying attention to all of the dialogue that's been thrown at you. When you first approach him, use your conversation skills when asking him about the Innkeeper's oddities. Eventually he will tell you about "the twisted servants of The Mother", which you should then ask the Innkeeper about if you haven't already learned about their plan to stop the Forest Shadow.
Hou will also sell you a selection of essence gems when you first speak to him, including an Intuition Gem and a Gem of Struggle. Once the cannibals are dead, Hou will join your party as a follower and teach you the Drunken Master combat style.
8 - Bamboo Cask
Check this cask for a small amount of silver.
9 - Vases
Smashing these two vases will turn up a small amount of silver and may contain up to two random essence gems (such as a Flawed Monk Gem and a Flawed Warrior Gem).
10 - Scrollstand
The text on this scrollstand is entitled The Tricksters.
11 - Vase
This trapped vase contains a fairly decent amount of silver.
12 - Bamboo Cask
If you're playing the PC version of Jade Empire, you can grab the Ultimate Scholar Gem from this bamboo cask. Unfortunately, none of the "Ultimate" gems exist in the Xbox version. Bummer.
13 - Exit
This opening leads down into the Cannibal Caves. You won't be able to reach this exit until you've had an audience with the Forest Shadow in Heaven, though.