Pulse the cookies in a food processor to make coarse crumbs. Transfer all but 1/2 cup crumbs to a bowl. Pulse the remaining crumbs until fine; add the 1/4 cup confectioners' sugar and pulse. Transfer the fine crumbs to a separate bowl.
Preheat the oven to 350 degrees F. Line a rimmed baking sheet with foil. Sprinkle the red and butterscotch candies into a 7-by-10-inch rectangle, alternating colors as shown.
Bake the candies until completely melted, 10 to 15 minutes. Immediately run a knife through the yellow candy to swirl it into the red (be careful-the candy will be very hot). Let cool completely on the baking sheet.
Meanwhile, make the frosting: Wipe out the food processor (no need to wash it). Add the butter, confectioners' sugar, melted chocolate, cocoa powder, milk and vanilla and pulse until smooth.
Trim the long top and bottom edges of the pound cakes with a paring knife to make them rounded.
Spread the frosting over the pound cakes, making sure to cover the rounded undersides (leave the ends exposed to resemble cut logs).
Sprinkle the coarse cookie crumbs on a platter. Place 1 cake on the crumbs, then run a fork through the frosting to create the texture of bark. Rest the second cake at an angle on top; repeat with the fork.
Sift the fine cookie crumb mixture over the logs to look like ash.
Snap the candy sheet into different-size shards; press the shards into the lower cake to create the flames.