this is a long one
I explored the orphanage fully before I left it. Apparently Gregory kidnapped Jennifer from the orphanage at one point.
I never found chocolates at the end, but I didn't really need them. The last battle was just too easy.
But this is what I've gathered in terms of plot: Jennifer once lived at the orphanage, where she was unliked by everyone but Wendy. (Apparently her parents were killed in a blimp crash or something?) Jennifer and Wendy are great friends, until Jennifer finds a puppy. Wendy is jealous of the divided attention, and as the Princess of the Red Rose, demands Brown as an offering and the dog dies. Apparently at this point Jennifer leaves the orphanage, probably adopted. What I don't get is why she was on the bus. Did her parents die again? Anywho, apparently the old orphanage is somehow haunted, as the spirit of Wendy, masquerading as Joshua, leads Jennifer back into the house. Wendy wants to make Jennifer love her again, but Jennifer still loves Brown, so it's like they're reliving what happened before. The bits on the airship are definitely the embodiment of the girls' imaginations, of the game they play where they're all princesses, princes, and servants of the Princess of the Red Rose. Jennifer is swept up in this game too as she tries to remember what happened and tries to save Brown. Meanwhile, Stray Dog is indeed Gregory, who's gone mad from the death of his son enough to make himself believe that Jennifer is him and kidnap her at some point. He is brought into the "innocent" game by Wendy, who trains him to punish naughty children. It appears that at the end, after Gregory is relieved from his misery, Jennifer forgives Wendy for what she did. But we don't know if Jennifer ever leaves, and it appears that she's still devoted to Brown despite wanting to keep her promise to Wendy. Maybe it's doomed to happen over and over again?
Then there are the side plots. Mr. Hoffman may have been having a sexual relationship with Clara, who was 16. For some reason the teacher left the orphange abruptly some point after Jennifer came to live there. The maid contacted the police about Gregory's behavior, but for some reason they didn't see fit to investigate him because he used to have a son? I couldn't follow the train of thought. After Jennifer found Brown, Wendy got Peter, a rabbit, (no doubt out of jealousy) but I think we can assume that in real life she killed Peter as a kind of example to Jennifer. And I'm convinced that there's something more to naming the bear, Prince Joshua, after the dead boy.
I forgot to go back to the Little Princess storybook. I'll look for a transcript of it later.
I might play through again. I've already got to the airship to look at the costumes. They're pretty neat.