What is the scene?

After discovering that Envy — the homunculus who murdered Hughes — is responsible, Mustang finds Envy's vulnerable form (a small parasitic creature) and begins systematically burning it. Not killing it — burning it, letting it regenerate, burning it again. The scene is prolonged, cold, and deeply unsettling. Mustang is not angry in the scene. He's methodical.

Why does this scene work so well dramatically?

Because it's the opposite of cathartic action. Mustang isn't releasing emotion — he's controlled it past the point of feeling. The methodical burning is what bottomless grief and rage look like after they've been disciplined for months into absolute precision. It's more frightening than an explosion would be.

What does Envy say to stop him?

Envy mocks him — says that Mustang is no different from Envy itself, that they both enjoy watching others suffer. Mustang doesn't deny it. He continues. This is the moral knife's edge the scene walks: Mustang is doing something genuinely terrible in a way that the story doesn't excuse.

How does Ed stop him?

Edward arrives and makes the argument that if Mustang continues, he'll lose himself — that the Führer Mustang intends to become cannot be built on this action. Mustang stops, but the moment Envy commits suicide (unwilling to live with what it's admitted), Mustang is visibly relieved rather than horrified.

What does this scene teach?

That grief, suppressed long enough, becomes something indistinguishable from its opposite. And that being stopped by someone who cares about you — before you cross a line — is itself a form of grace. Ed stopping Mustang is Hughes' friendship continuing to protect him.