First Question about the candle thing Yep they can regain their emotions If they have a strong enough will and they can resist the sleep if they are Insomniac or have Strong mind 

and They can resist the insanity and killing self's By strong will. and no it don't force the humans the kill themselfs that only on the creatures nightmare has encontered because he is fluent at doing that at them. so it won't work on elementals or what ever Soren is 

and the thing that Scattered their powers It was something Else or it might be the something else used the lights for there own evil gain. but they are blaming the lights as it happened around about the same time 
(It might have something to do with Cthulhu who was sealed away by death and Mary... or the Devil who has tried to murder the 3 over the course of Eons)