Hi David, thanks again for your explanation. I think due to your expertise/experience with CR problems you are able to quickly get to the point of the argument and hence the clarity/confidence in your analysis.
You are starting with the premise that the red worm pop. would fall due to the blackened trees. Clearly then, C is the correct choice because it implies that despite the favorable climate, the red worm pop. has decreased and so the lack of the camouflage must be the reason for it. This depends on the assumption that the red worm pop. has decreased to the level of the black worm pop. and hence they are nearly equal. On the other hand, if you don't start with the initial premise, then option B also makes sense. If the birds prefer black worms over red ones, before the blackening of the trees, more black worms would have been eaten due to this preference and the lack of camouflage leading to the lower pop. After the blackening, due to the new camouflage, less black worms would be eaten and their pop. could have risen to the levels of the red worm regardless of whether the red worm pop. decreased or remained stable. In this case also, the populations could become equal.