An assistant animator did most of the masking in photoshop and other still image magic tricks, e.g., a lot of the backgrounds and had to be extended or filled in once the characters were removed. All the elements were made into PNGs.
Excluding the title and credits, the only color effects that weren’t done in AE was the fire in the beginning and the few times the axe was given a slight red color. The fire was done with by just randomly transitioning between two images with different amounts of orange brightness.
As far as the “how hard” question: The animation was pretty basic; mostly the first things you learn in AE (tweening motion and scale, tweened color effects). If you’re already familiar with layered timelines it shouldn’t be too hard to transition into it. The “hard to use” summary could be because the program can do a heck of a lot. It’s similar to Photoshop this way, in that basic things can be learned relatively quickly, but it can take quite a while to have the rest down. But it’s not really built as a user-friendly consumer editor like others out there. AE appeals to those that like to think for the program; tweaking the numbers in nerdly fashions. My 2 cents.