Vastwood Hydra is already in the graveyard at the point where you say "And when the Vastwood Hydra goes to the graveyard". But everything else is correct.

1. You declare your attackers. [Kalonian Hydra's third ability triggers.]
2. Kalonian Hydra's third ability is placed on the stack, then resolves:
   • Add 4 +1/+1 counters to Kalonian Hydra.
   • Add 4 +1/+1 counters to Vastwood Hydra.
3. Your opponent declares his blockers.
4. You cast Mercy Killing targeting the Vastwood Hydra, then it resolves:
   1. Sacrifice Vastwood Hydra. [It goes to the graveyard here. This triggers its second ability. When it last existed, it had 8 power and 8 +1/+1 counters.]
   2. Put 8^[1] 1/1 Elf Warriors on the battlefield. [Cathars' Crusade's ability triggers 8 times.]

At this point, a player (you) is about to gain priority for the first time since some abilities have triggered, so triggered abilities are placed on the stack. You can place your abilities on the stack in any order you want. It doesn't really matter here.

1. Place Vastwood Hyra's second ability on the stack.
2. Place Cathars' Crusade's ability on the stack. (1)
3. Place Cathars' Crusade's ability on the stack. (2)
4. ...
5. Place Cathars' Crusade's ability on the stack. (8)
6. Cathars' Crusade's ability (8) resolves.
   1. Place a 9th counter on Kalonian Hydra, and one on each of the 8 Elf Warriors.
7. Cathars' Crusade's ability (7) resolves.
   1. Place a 10th counter on Kalonian Hydra, and a 2nd on each of the 8 Elf Warriors.
8. ...
9. Cathars' Crusade's ability (1) resolves.
   1. Place a 16th counter on Kalonian Hydra, and an 8th on each of the 8 Elf Warriors.
10. Vastwood Hyra's second ability resolves.
    1. Place 8^[1] counters on Kalonian Hydra for a total of 24.

Notes:

1. Last known information (LKI) is used.

Vastwood Hydra is already in the graveyard at the point where you say "And when the Vastwood Hydra goes to the graveyard". But everything else is correct.

1. You declare your attackers. [Kalonian Hydra's third ability triggers.]
2. Kalonian Hydra's third ability is placed on the stack, then resolves:
   • Add 4 +1/+1 counters to Kalonian Hydra.
   • Add 4 +1/+1 counters to Vastwood Hydra.
3. Your opponent declares his blockers.
4. You cast Mercy Killing targeting the Vastwood Hydra, then it resolves:
   1. Sacrifice Vastwood Hydra. [It goes to the graveyard here. This triggers its second ability.]
   2. Put 8^[1] 1/1 Elf Warriors on the battlefield. [Cathars' Crusade's ability triggers 8 times.]

At this point, a player (you) is about to gain priority for the first time since some abilities have triggered, so triggered abilities are placed on the stack. You can place your abilities on the stack in any order you want. It doesn't really matter here.

1. Place Vastwood Hyra's second ability on the stack.
2. Place Cathars' Crusade's ability on the stack. (1)
3. Place Cathars' Crusade's ability on the stack. (2)
4. ...
5. Place Cathars' Crusade's ability on the stack. (8)
6. Cathars' Crusade's ability (8) resolves.
   1. Place a 9th counter on Kalonian Hydra, and one on each of the 8 Elf Warriors.
7. Cathars' Crusade's ability (7) resolves.
   1. Place a 10th counter on Kalonian Hydra, and a 2nd on each of the 8 Elf Warriors.
8. ...
9. Cathars' Crusade's ability (1) resolves.
   1. Place a 16th counter on Kalonian Hydra, and an 8th on each of the 8 Elf Warriors.
10. Vastwood Hyra's second ability resolves.
    1. Place 8^[1] counters on Kalonian Hydra for a total of 24.

Notes:

1. Last known information (LKI) is used. When it last existed, it had 8 power and 8 +1/+1 counters.

Vastwood Hydra is already in the graveyard at the point where you say "And when the Vastwood Hydra goes to the graveyard". But everything else is correct.

1. You declare your attackers. [Kalonian Hydra's third ability triggers.]
2. Kalonian Hydra's third ability is placed on the stack.
3. Kalonian Hydra's third ability resolves:
   • Add 4 +1/+1 counters to Kalonian Hydra.
   • Add 4 +1/+1 counters to Vastwood Hydra.
4. Your opponent declares his blockers.
5. You cast Mercy Killing targeting the Vastwood Hydra.
6. Mercy Killing resolves:
   1. Sacrifice Vastwood Hydra. [Its second ability triggers. When it last existed, it had 8 +1/+1 counters.]
   2. Put 8 1/1 Elf Warriors on the battlefield. [Cathars' Crusade's ability triggers 8 times.]

At this point, a player (you) is about to gain priority, so triggered abilities are placed on the stack. You can place your abilities on the stack in any order you want. It doesn't really matter here.

1. Place Vastwood Hyra's second ability on the stack.
2. Place Cathars' Crusade's ability on the stack. (1)
3. Place Cathars' Crusade's ability on the stack. (2)
4. ...
5. Place Cathars' Crusade's ability on the stack. (8)
6. Cathars' Crusade's ability (8) resolves.
   1. Place a 9th counter on Kalonian Hydra, and one on each of the 8 Elf Warriors.
7. Cathars' Crusade's ability (7) resolves.
   1. Place a 10th counter on Kalonian Hydra, and a 2nd on each of the 8 Elf Warriors.
8. ...
9. Cathars' Crusade's ability (1) resolves.
   1. Place a 16th counter on Kalonian Hydra, and an 8th on each of the 8 Elf Warriors.
10. Vastwood Hyra's second ability resolves.
    1. Place 8 counters on Kalonian Hydra for a total of 24.

Vastwood Hydra is already in the graveyard at the point where you say "And when the Vastwood Hydra goes to the graveyard". But everything else is correct.

1. You declare your attackers. [Kalonian Hydra's third ability triggers.]
2. Kalonian Hydra's third ability is placed on the stack, then resolves:
   • Add 4 +1/+1 counters to Kalonian Hydra.
   • Add 4 +1/+1 counters to Vastwood Hydra.
3. Your opponent declares his blockers.
4. You cast Mercy Killing targeting the Vastwood Hydra, then it resolves:
   1. Sacrifice Vastwood Hydra. [It goes to the graveyard here. This triggers its second ability. When it last existed, it had 8 power and 8 +1/+1 counters.]
   2. Put 8^[1] 1/1 Elf Warriors on the battlefield. [Cathars' Crusade's ability triggers 8 times.]

At this point, a player (you) is about to gain priority for the first time since some abilities have triggered, so triggered abilities are placed on the stack. You can place your abilities on the stack in any order you want. It doesn't really matter here.

1. Place Vastwood Hyra's second ability on the stack.
2. Place Cathars' Crusade's ability on the stack. (1)
3. Place Cathars' Crusade's ability on the stack. (2)
4. ...
5. Place Cathars' Crusade's ability on the stack. (8)
6. Cathars' Crusade's ability (8) resolves.
   1. Place a 9th counter on Kalonian Hydra, and one on each of the 8 Elf Warriors.
7. Cathars' Crusade's ability (7) resolves.
   1. Place a 10th counter on Kalonian Hydra, and a 2nd on each of the 8 Elf Warriors.
8. ...
9. Cathars' Crusade's ability (1) resolves.
   1. Place a 16th counter on Kalonian Hydra, and an 8th on each of the 8 Elf Warriors.
10. Vastwood Hyra's second ability resolves.
    1. Place 8^[1] counters on Kalonian Hydra for a total of 24.

Notes:

1. Last known information (LKI) is used.