Modified from CliffsNotes
That Cherry Valance is acting as a spy for the greasers shocks Ponyboy and Johnny, but then they learn that Bob, the dead Soc, had been her boyfriend. Dally informs them that Cherry has said that she is willing to testify that the Socs were drunk that night and that Johnny acted only in self-defense. Cherry's stance gives Johnny the hope he needs, and he announces that they are going to turn themselves in to the police.
Dally relates to the two boys how worried the gang is about them. Johnny just keeps asking whether his parents have been worried. Dally avoids the question as long as he is able, but then has to admit to Johnny that, no, his parents have not asked about him.
Driving back from Dairy Queen, they spot the church on fire. A group of people stands around the church; a school evidently out on a picnic, and Ponyboy and Johnny jump out of the car to find out what's happening. As they arrive on the scene, one of the women shouts that some of the children are missing.
Both Ponyboy and Johnny leap through a window in search of the kids. An older man — later identified as Jerry Wood — follows them, but he is unable to get through the small window. The boys quickly find the kids and hand them out through the window to safety. Dally is now on the scene and he warns the boys to get out because the roof is starting to cave in. After dropping the last kid out the window, Johnny shoves Pony out, and the roof collapses. Pony blacks out, but Dally goes back inside for Johnny.
When Ponyboy regains consciousness, he hears sirens. He assumes that he is in a police car until Jerry Wood (who accompanies him) tells him that they are in an ambulance, and Johnny and Dally are in the ambulance behind them. Dally has a badly burned arm, but Johnny is in far worse condition, with a possible broken back and bad burns. They are all considered heroes for saving the children.
At the hospital, doctors examine Ponyboy, and except for a few burns and a big bruise across his back, he's fine. He is in the waiting room, worried about Johnny and Dally, when Darry and Soda arrive. When Pony looks at Darry he sees that he is crying. In that split second, Ponyboy realizes that Darry does care for him, that he was just trying too hard. After losing his parents, Darry fears losing another loved one.