Allegedly, this was cut from the theatrical release of the film at the demand of the producers who felt it was too much for the kiddies to handle, and in turn cut from all home video releases, and the only copy containing this scene was a private print owned by Don Bluth himself, which was stolen by someone from his home in the mid-90s while he was on a trip outside of the country. The Youtube uploader apparently obtained it from some person who had it burned onto a disc who in turn obtained it from a source she refused to name. I'm guessing that source is either the thief or someone who knows the thief, assuming the whole story about it being stolen in the first place is true.

There's also supposedly another fully animated scene that was cut of Charlie being hit by a car that no one has found yet.

Also, the only scene in question that was cut are the really crappy offscreen recordings you see that have been spliced in (ie where Satan says "YOU'RE MINE!") The rest of it was in the final release of the movie.