My father was a forensic psychiatrist heavily involved in some of these cases, testifying for the defense of the accused. The moral panic phenomenon is real and complex, but there's a more basic failure of rationality underlying the whole movement which was the false belief in the inherent veracity of children.

Apparently juries (and judges alike) took the testimony of children at face value. The problem was that investigative techniques of the social workers invariably elicited the desired reactions in the children. In law you have the concept of leading the witness, but that doesn't apply for investigations of child abuse. The children are taken away from their parents and basically locked up with the investigators until they tell them what they want to hear. It wasn't even necessarily deliberate - from what I understand in many cases the social workers just had a complete lack of understanding of how they were conditioning the children to fabricate complex and in many cases outright ridiculous stories. Its amazing how similar the whole scare was to historical accounts of the witch trials. Although as far as I know, in the recent scare nobody was put to death (but I could even be wrong about that, and certainly incalculable damage was done nonetheless).