We present Hubble Space Telescope imaging and spectroscopy for the extended high-ionization cloud known as Hannys Voorwerp, near the spiral galaxy IC 2497. WFC3 images show complex dust absorption near the nucleus of IC 2497. STIS spectra show a type 2 Seyfert AGN of rather low luminosity. The ionization parameter log U = -3.5 is in accord with its weak X-ray emission. We find no high-ionization gas near the nucleus, adding to evidence that the AGN is currently at low radiative output (perhaps now dominated by kinetic energy). The nucleus is accompanied by an expanding ring of ionized gas 500 pc in projected diameter on the side opposite Hannys Voorwerp, with Doppler offset 300 km/s from the nucleus (kinematic age < 7 x10^5 years). [O III] and H-alpha + [N II] images show fine structure in Hannys Voorwerp, with limb-brightened sections and small areas where H-alpha is strong. We identify these as regions ionized by recent star formation, in contrast to the AGN ionization of the entire cloud. These candidate normal H II regions contain blue continuum objects, whose colors are consistent with young stellar populations; they appear only in a 2-kpc region toward IC 2497 in projection. The ionization-sensitive ratio [O III]/H-alpha shows no discernible pattern near the prominent hole in the ionized gas. The independence of ionization and surface brightness suggests that substantial spatial structure remains unresolved, to such an extent that the surface brightness sample the number of denser filaments rather than the characteristic density in emission regions. These results fit with our picture of an ionization echo from an AGN whose ionizing luminosity has dropped by a factor > 100 (and possibly much more) within the last 1-2 x 10^5 years; we suggest a sequence of events and discuss implications of such rapid fluctuations for AGN demographics. (Abridged)
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