Wait, so he wears a suit in the non-hallucination scenes, but still that mask? I don't really know all about the Batman stories, so you'll have to fill me in on this one. Why the hood/mask/whatever?
In the script, Dr. Crane just uses the mask/sack with a combination of fear gas to scare his patients at Arkham Asylum. I don't remember what exactly he did, but he was involved in smuggling drugs or something so that's why he would need some type of mask to hide his identity. I don't think they could have justified the Scarecrow's costume from the comics/animated series so they had him wear the suit but keep the mask since it's a defining part of the costume. There are going to be some hallucination scenes from the point of a view of a victim of the fear gas and that's probably where they can come closer to the original costume.