Prince Blueblood, scorned after his easy and cushy lifestyle was challenged and he was forced to act reasonably with his spending and wealth, decides he is going to rise up against the evil new oppressor to his totally reasonable and not at all decadent whims, APPLEJACK! He first tries to make his position known with verbal threats, but then moves on to bullets. In one such attempt, Spike is wounded, but rather than let this get him down he kicks his rebellion into high gear! Summoning the... 'brilliance' of Flim and Flam, he steals robotic blueprints from Twilight and builds himself an entire army! In a three-pronged attack, he sends his forced after the Crystal Empire, Ponyville and Canterlot itself, eager to return the world back to the comfy status Quo he has so enjoyed!
This arc technically started in thread 1, though it did not actually engage till much, much later.
Said start is the first recorded instance of the "Apple Family Tradition", wherein "A blood vessel has ruptured in your eye, which I believe is the ancient Apple family tradition to signal this conversation should end."
During the final battle, Flim and Flam were meant to be killed off, but a poll brought them back. They're fine now. Well, mostly.
While the tournament before this was techncially the first "Arc", this is the first real big arc with ramifications and changes to the staus Quo.