The Governor pitches his plan to his current group -- move in on the prison and take it, now, hopefully peacefully, using his hostages Hershel and Michonne as leverage. They take some convincing, and Lily seems less on board than anyone. But the Governor claims to be following his new (old) morality of survival, and won't be talked down. He leaves Lily, Megan, and some others behind at a riverside campground while he goes ahead with Tara, Alisha, and of course Mitch and Mitch's army tank.
The Governor seems to be as good as his word, showing up at the prison gates with his forces and giving the current residents until sundown to clear out. But Rick says they're not moving, even when the Governor presents his hostages. Rick offers an alternate plan (one that Hershel also floated earlier): everyone can live together in the prison in peace. He makes a good case, but the Governor cuts off the debate with Michonne's sword -- by cutting off Hershel's head.
So now it's a shooting war. Mitch crashes his tank through all three layers of the prison's fences while blasting holes in the walls, making the place useless. Our people do their best to fight them off, as well as the zombies that follow them in through the downed fences, but they're outnumbered and outgunned, and an evacuation commences under fire. Meanwhile, Lily shows up with Megan, who got bitten by a zombie at the "safe" place the Governor left them, so it's reasonable to assume she's probably even less on board with this plan than before. But there's a pitched battle going on, and in addition to Hershel, the casualties end up including some prison extras and most of the Governor's forces. Including Alisha (thanks to idiot-child Lizzie doing something right for once), Tara's nerves, and Mitch and his tank (both thanks to Daryl). As for the Governor himself, he's thisclose to killing Rick with his bare hands when Michonne runs him through with her liberated sword. Then she leaves him to die on the grass, which he seems just about to do until Lily comes and finishes him off. Quite a finale he threw for himself there, though.
Much as at the end of season two, the group seems scattered to the four winds, but without a final-act reunion this time. Glenn's on the departing bus of sick and old evacuees; Maggie, searching for Beth and Judith, ends up left behind with Sasha and a wounded Bob; Beth is with Daryl; Tyreese gets saddled with the kids; and after finding no sign of Judith but her empty, bloody car seat, Rick and Carl have no choice but to abandon the now-overrun prison and not look back. If she's still alive, that kid had better start living up to Daryl's nickname for her in a hurry.
The Governor has most of his camp assembled (aside from Lily and Megan, that is) and is making a folksy little announcement about how he needs to talk them into doing something. Tara asks what he wants them to do, and he says they need to survive. Always a red flag. The Governor explains how this camp isn't going to cut it for them in the long term, and while he's describing how it'll eventually be overrun by either biters or hostile people, we flash back to his vigil outside the prison, watching Michonne and Hershel torching the pile of walkers. As he voice-overs to his current group about the prison's amenities, the Governor jumps out from behind a tree and cold-cocks Michonne, and then gets the drop on Hershel before the latter can finish raising his gun. I don't know why Hershel thought the Governor would want to take him prisoner, but that's exactly what the Governor does.
And now he's telling his fellow campers that with the two hostages he too, they can potentially take the prison without anybody getting hurt. Some of his campers are a little shocked to learn they're suddenly in the kidnapping racket. The Governor reiterates that they can take the prison without killing anyone, "But we need to be prepared to." I'm pretty sure at least one of this group already is. The Governor goes on, claiming that some of those in the prison are thieves and murderers who mutilated him, burned his former camp and killed his daughter (even though we know the Governor did that middle thing himself). He says they need to move quickly before the people at the prison realize what's happening and start to prepare. After a long pause, Tara says, "I'm in." And so does everyone else. So that was actually pretty easy. The Governor tells them to pack up and says they'll go over the plan in a half hour. Don't forget the most important part of the plan, which is the part where if you retreat and the Governor orders you back, you don't give him any fucking sass.
While the meeting breaks up, Lily rolls in, having overheard the whole speech and not seeming happy about it. "You said they weren't all bad people," she points out. The Governor glibly says they're with bad people. "Am I?" Lily asks. Yep. You are now. The Governor just promises to keep her and Megan alive. So there's her answer. Even topping it off with an "I love you" doesn't reassure her.
The Governor has Michonne and Hershel tied up and stashed in an RV, and seems to be abiding by the Geneva Conventions so far. The Governor maintains that it's not personal, and that he's not even mad at Michonne anymore over Penny (nobody brings up the eye she wrecked). All he wants is the prison, preferably without hurting anyone. Michonne starts issuing some threats of her own until Hershel shuts her up. "Governor --" "Don't call me that," The Governor says with as much heat as he's shown this whole scene. Now he tells me. It's a pain in the ass to type, you know. Hershel offers to coexist peacefully, and the Governor says Hershel's a better man than Rick. Like that's news. Hershel can see the Governor has changed, and says Rick has, too. The Governor says it will never work with him and Rick or with him and Michonne, for that matter. "There's all kinds of ways I can do this. This way you get to live and I get to be…" Outside the trailer, apparently. But we get it. He gets to be Brian, and his replacement wife and daughter don't get to hear about his Woodbury exploits from the only people still alive to talk about them. Hershel recognizes that the Governor is willing to hurt people to get the prison, including Hershel's daughters. "If you understand what it's like to have a daughter, then how can you threaten to kill someone else's?" The governor gives an answer that says it all: "Because they aren't mine."