There are many tentacles, each of which supplies a buff to the Omen Feeder. Let someone, usually the tank, do this part. Only one person should grab aggro and lead the Omen Feeder around until the tentacles are down. The Omen Feeder will damage the tentacles, which removes them and their buffs.
As each tentacle goes down, you get a message in Narrative: "The Omen Feeder's Acid Stream sends the tentacle reeling back into the lake."
You do NOT ever have to attack the Omen Feeder while the tentacles are up. Doing so may cause death!
Walk up to The Omen Feeder. When you're in range, he activates and fixates on you. Now simply run around stopping or weaving around an active tentacle until it is moving into the lake (it gets very vertical).
Resolve may be the key to doing this successfully. The Acid stream (green explosion) can one shot players who are not very well geared. Ditto for "heroes" who decide to attack The Omen Feeder before the tentacles are down. Not only does this slow down the process but the offender usually gets instant karma by dying.
If you're not involved on this step, just go to the edges of the lake and set your merc on passive mode and watch.
Once the Omen Feeder is spawned, only kill mudfins as needed to protect the tank and group members. Killing mudfins too close to the Omen Feeder (as the tank brings him around to the tentacles) may get you aggro, which makes it harder for the tank to hold aggro.
When the tentacles are all gone, burn the Omen Feeder.
Periodically, you'll be tossed in the air. Avoid landing on one of the aerial lily pads where a hydromancer is. DO NOT, UNDER ANY CIRCUMSTANCES, KILL A HYDROMANCER. If anyone does, it results in a lowered reward for everyone. Otherwise, at the end, you have a chance to win the fabled/relic helmet.
EQ2i credits posts in this thread written by Bhayar, Conifur, Melkior, Mallaria, DoomDrake at the SOE/DBG Forums for some of the information in this article.