@Shortee: Aye, perhaps I should've explained the timing mechanic explicitly: Each obstacle has a few "danger" frames which it's unsafe to pass through during.
In Act I, the fire flares up when the rum drop lands on it. in Act II, the duelists are dangerous during the slashes. Walking by right after these events happen gets you safely past.
In Act III, the overhead icons are Eyes, indicating that an officer is close enough to see the first mate Arrow (and any Black Spot being handed him). If a Watcher is Watching when you give the Spot, Arrow's thrown in the brig and Israel never makes it to the mutiny scene in Act III. Furthermore, Arrow drinks from his secret bottle when out of sight of the officers. You get a different outcome if he's drinking also, so "beating" this level requires patience as well as timing.
Hope that cleared it up!