What happened in Chapter 20 (main events)? I am confused.

In Chapter Twenty, The McGill watches as Allie realizes she's been caught and he suddenly doesn't want her to be afraid of him. Allie is obviously afraid of what he'll do but The McGill takes a cookie, places it in her hand, and squeezes so the cookie breaks. The fortune inside reads, "Forgiveness keeps destiny on track" and he feels his anger melt away.

Allie continues trying to work out a plan to save Leif and Nick. She learns that The McGill has been beaten one time, by a gang at the Steel Pier in Atlantic City. Pinhead reveals that he was among the gang but he turned traitor and set The McGill free. Pinhead reveals that he's seen people who'd been skinjacked in insane asylums when he was alive. He says if he were alive he wouldn't want The McGill inside him.