I think the King being a scarecrow in this card could possibly be a Wizard of Oz reference: the Scarecrow in that story was all about finding a brain, and what better to represent the mental province of the suit of Swords than that very same organ...? This King could arguably be one potential incarnation of that same character after having completed his quest. Just a theory, but even if it's not what the deck creators had in mind, I don't think it's horribly off-base...
I've always had the sense that it's indeed the King who's creating and controlling the storm that occupies much of the card. More than anything, it's a windstorm, and wind is air in motion...and air is another aspect of the Swords suit. I think the King has whipped up this little tempest, and he's doing it to impress the other figure in the card, although whether to attract her with a show of his power, to frighten her, or something else, it's difficult to say (and that may be one of the things that varies from reading to reading).
As for that other figure...oddly, I've always had the feeling that this is the Scarecrow-Land version of the Queen of Wands. I know she doesn't look like the Queen depicted in the actual Queen of Wands card in this deck, but the figure here looks female, she's wearing a crown, and she's holding a wand, so...Q. of W.? I'm imagining she somehow wandered over from Wands territory, and this entire scene is showing the King's reaction to her presence (the sky behind her over that land she seems to have come from is not the same dark, dark blue as that above the King, but is instead the hues of fire, which is the Wands suit's element...although how a scarecrow-person would wander is somewhat mysterious -- maybe that's a magic wand she's holding, and she zapped herself there?).
It strikes me that the King is manipulating objects that represent certain fields which can certainly affect, and be affected by, the mind: music (the guitar, the bugle), combat (the bugle might also symbolize military activity, the call to arms), time (the pocket-watch), interpersonal power (the crown). And if that's his own crown, which is what I've always assumed, this would seem to indicate that he cares far less about the trappings and appearances of power, and much more about the actual possession and use of it. And he might be using his own power to warn the other figure from encroaching onto his territory. This could be his way of drawing a line she's not to cross -- much like drawing a line in the sand with...a sword.
And he is definitely a very powerful character: I remember seeing some nature filmstrip in school as a youngster in which they showed us that the winds from a tornado or a hurricane (I can't recall which one it was) were mighty enough to drive a simple piece of straw through a telephone pole...and the King here seems to have used his winds to do something similar in forcing one of his swords to completely impale the post upon which he himself is tethered, which is a pretty respectable feat if managed by generation of intense winds alone!
So all in all, I think this card shows the King of Swords we might know from other decks, but in this depiction, it's his most active side that's being stressed. This is the King of Swords at his most cutting and most fiercely "airy," and he's clearly a force to be reckoned with... I also wonder if maybe the suit of Swords can represent not just the mind, but the ego -- a storm of resistance isn't a bad way to represent how the mind, and especially the ego, would defend themselves if they felt threatened...?