Shortly twards the end of the film, Heather makes a startling and weakening confession to the camera knowing she will never be found.
Theory 1.)Now, since the police put the films together in the order they thought was right, what if, JUST WHAT IF, this scene is supposed to happen AT THE END... THATS RIGHT.. Our little friend has done the killing and is making her confession to the camera. She has been so engrosed about TBW that she lost it and turned against her friends.
Theory 2.)Its just a time when Heather broke down and realizing that her strength was the reason for the disapearance of Josh and soon to be the death of herself and Mike.
Theory 3.)Blair has entered into Heathers body and taken it over.
Theory 4.)jim stempka -My main theory is that heather was behind it all. the confession was for everything she had done, and everything she was about to do. the two camera's showed two sides to the events. the black and white film represented what was actually going on. the color, hand held camera, was heather's distored view of reality. she was so obsessed w/ the blair witch, that she started acting out as it. her color footage was that of the fake world that she was creating. she was committing the acts, but not taking responsibility for them.
Theory 5.)Anarchy Bob -Heather is so engrossed by doing her movie and seeing that all the others are scared senseless and want to go home, she keeps them running in circles. Remember that she is about the only one using the compass, the only one that can acurately read the map and she makes a great deal about her being responsible for their lost status, despite's Mike's claims that it's his fault because he kicked the map.