#potential idea

In a similar way to how they "grounded" Riddler by taking inspiration from the real life Zodiac Killer and Pizza Bomber case, the writers should draw influence from The Unabomber, Ted Kaczynski.

In my mind, this iteration of Crane is a disgruntled psychology professor who was fired from Gotham University. He has worked up some controversial theory involving fear that he tries teaching to his students, but is booted from the university. The theory- perhaps drawing from his recent "Fear State Theory"- is then put into action on Gotham.

It could be in part to help it become more resilient and in part to vindicate himself/get revenge on those who ousted him from the university. Like it is implied with Riddler, he claims to be trying to help the city, but is in part doing this as a way to lash out.

Small bombs are hidden across the city- in parks, outside of public institutions, at the university. However, when they detonate, they spread the fear toxin, driving the person opening the device, and anyone in the immediate area into a panicked frenzy. Keeping with the Fear State Theory parallel, this is the "Shock to the System" first step.

Next, he begins contacting the media, sending (fake?) manifestos to make them think there is another "Riddler-type" running around Gotham. Maybe he suggests that he has tampered with Drops, or some other drugs, and reveals the Scarecrow identity to the public.

Perhaps his theory doesn't work as he planned? The people do not confront the strawman he has created. The Fear State he has created only encourages despair. Batman, now a source of hope instead of vengeance, is the only one able to rise up and stop Crane.

At least, that is the set up, but here are some other ideas:

Crane sends little straw dolls instead of his bombs occasionally. Some have fear toxin-poisoned pins inside.

I like the idea that the Drug-Tampering threat is false, only something to scare people further. Perhaps something else is actually tampered and the resulting panic from the initial threat creates a bigger problem.

I don't really want Crane to be involved with Arkham until he is eventually caught.

When he is caught, I imagine him going peacefully with the GCPD. He is wearing old, tattered clothes and is generally disheveled looking.

Police investigating his hideout accidentally infect themselves with the toxin. In preparation to being caught, Crane laced some of the items around his hideout with the toxin. Rusty farm tools, the awl he used in making his costume, things like that.