I’m with hjbau. I saw everything breaking up around them when the curse happened. In the episode with the sinkhole we see SW’s glass coffin broken and at the bottom of the elevator shaft when Regina drops the piece back down. FTL is destroyed. Not that the writers couldn’t somehow reverse the curse and restore it, but for now there seem to be pieces of it all over and under and around SB.
As for August, I am not a Pinnochio theorist, but it will not ruin the show for me if the writers do a good job connecting it up, and I would say that so far they have not disappointed me. “Dreamy” was probably my least favorite episode, but it wasn’t really connecting anything up for me, either.
The one thing about August’s leg that I think would be kind of neat, is that maybe outside of SB August could live a normal life as a boy/man, but by coming back to SB to help Emma, he is affected by the curse now and is turning back into wood. He needs Emma to believe to keep him from becoming wood again. Crackpot theory, I know, but it would/wood be interesting 🙂 I still want to see if Emma can leave SB. I think she is stuck there now that she has arrived.