Candle Cove was not meant to be in any way scary, but many things were considered as such. Most of the time, the Skin-Taker was the scariest aspect, and resulted in night terrors of the children who watched the show.
A popular urban legend depicts that what caused the show to be cancelled was the twelfth episode of the second season, which reportedly contained nothing but all of the characters, with the exception of Poppy and Ms. Laughingstock, screaming and, in Janice's case, crying. There were claims that many, if not all, of the children who saw this episode had nightmares varying from minor to severe night terrors. As no actual clips of the twelfth episode can be found, the claims have been denied to this day.
It was revealed in a recent interview (2001) with the show's creators that the second season was not to be completed at only twelve episodes. Episode twelve of season two, though taken by many as the series finale, was most likely the last aired episode, due to the crew being in debt to the Walt Disney Company for the use of the song, "Yo, Ho, a Pirate's Life for Me". The crew could not come up with the money over the one and a half years of being on the air, so due to running out of funding, they could not complete or air the final three episodes of season two.
Episodes that were supposedly "SEBTAW-exclusive" were often more violent than normal, and sometimes contained themes that supposedly were "too mature" for children, such as in Mrs. Skin-Taker, when the titular character complains that her husband "changed" since they got married and threatens to divorce (an unthinkable subject for television at the time).
The original version of the episode featured Susan Siren. Susan Siren was dressed in a very inappropriate and sexualized manner in Ship Crash, and caused such an outrage that she never appeared in any other episodes. She apparently was originally going to be cut from the development, but was included in the episode for unknown reasons. Also, the actress who played her was not told what she would be wearing, and ended up suing the studio.
Many members of the cast and crew have had various complaints about the way the show was run, as described in the the anonymously published book, "Candle Cove Experiences: Tales of the Laughingstock".
- As told by an anonymous crew member, the director put the cast and crew under terrible conditions. "Jane" exclaims "HE WAS A NUT JOB! A LOONEY! He forced a five year old girl (Jodie Silver) to near heatstroke, changed scripts. Everything was fine until the show grew darker and darker."
- When the screaming episode was filmed, the crew members were forced to scream, and Michael Colon's throat actually ended up bleeding. Mr. Colon's voice never recovered and as a result, his voice became rough and had a gravel-like tone.
- Emerson Grimes had also been seen talking to the puppets in his office, sometimes pleading with them. This seems to suggest that Grimes may have had psychological issues that were never addressed.
- Jodie Silver claimed that "...the show has given me bad dreams, ruined my childhood and I have even had therapy because of it."
- Walter Shay, a stagehand, discussed two planned episodes that never aired in season two.
- "That Grimes in one episode has Janice, implied of course, to be cannibalized by the Skin-Taker in a dream. Another one was to reveal that Nathan had been kidnapped and turned into part of a cape for that ****. ****, Grimes wanted to **** have Janice killed and skinned alive. ON CAMERA! The end of the series was to have continued with Melrose winding up in the world looking for Janice. Me and the cast had to make sure that never happened so we shot those ideas down every time. This pissed him off, I think that's why he did that final episode, you know. The Screaming Episode."
- A Ship on the Horizon caused seizures as a result of flashing lights during an explosion. This was later edited out to prevent it from happening in the future.
- Melrose's bullying and somewhat abusive behaviour in the pilot upset many children.
- Milo and the Banana King smoked cigars, and Poppy usually smoked from a pipe, which some parents objected to.
- The SEBTAW technology the shows creators claimed to use supposedly caused aggression in children.
- The Banana King often made lewd comments.
- ManBearPig's brief appearances were seen as subliminal messages, especially since he often appeared for less than a second.
- The Candle Cove Curse has led some to suspect some sort of conspiracy.
- There were some minor copyright issues after HeyKids Studio shut down, but Caroline Barker and Mary Prescott ere eventually given equal shares of the rights after Tom Thrives will was found, since the copyrights actually belonged to him, and not the studio. Mary later sold her half to Caroline Barker.
- Adrian Grimes, despite showing hatred for the show, has tried to gain the rights to the show many times, and regularly criticized Caroline Barker.