I think that Scarecrow is dead. I think he was eaten by Croc in the first game, and it isn't really him terrorizing Gotham in Arkham Knight. I think that someone else, possibly the Arkham Knight or whoever he/she is working for, is using Scarecrow's fear gas, and every time you see Scarecrow in the game, it's just a hallucination created by the fear gas.
My reasons for thinking this are that the Arkham games have a reputation for leading players to believe X only to reveal Y. Characters turn out to be someone other than who we think they are, and the person who ends up being the main villain usually turns out to be someone other than the person we thought was the main villain at the start of the game.
A lot of people think that the identity of the Arkham Knight will be the twist of this game, but the problem with that is that everyone is expecting it, and, at this point, people have guessed every possible candidate for being the Arkham Knight. Unless they manage to come up with something completely out of left field, like having the Arkham Knight turn out to be Alfred or something, I don't see how they can surprise by revealing who the Arkham Knight is. Just the fact that everyone is already sort of expecting the Arkham Knight's identity to be a twist sort of kills the twist. The thing that made the twists in the previous games work was that no one was expecting them before playing the games. That's why I think that the Arkham Knight is just a red herring, and the real twist is that Scarecrow has been dead this whole time.
The other reason I think this is that the Arkhamverse version of Scarecrow seems to be heavily influenced by Freddy Krueger. So why not go all out and have him be a dead guy who continues to terrorize the person he hold responsible for his death(Batman) in his nightmares. I'm not saying they make Scarecrow a ghost or anything like that. It's not actually Scarecrow doing the terrorizing, but it's never actually been Scarecrow doing anything that Scarecrow does, if you think about it. Jonathan Crane is just a guy. He poses no threat to Batman whatsoever, but the idea of Scarecrow, which is an illusion created by the fear gas, does, and, as long as the fear gas exists, there's no reason why that idea can't continue to live on and be as much of a threat to Batman as it ever was. So, while having Scarecrow turn out to be dead the whole time will probably upset a lot of Scarecrow fans, I can't think of anything more fitting for the character than to have him continue to haunt Batman from beyond the grave.