If an "uninterruptible animation" such as an attack is in effect while K. Rool collides with Crownerang, his head will flash green as the crown appears on his head. However, if done frame perfectly, there is no flash. This completely skips the crown pickup animations, leaving K. Rool less open for punishment. Given the broad execution requirement, it is a very common occurrence during play.
Most K. Rool players will attempt to attack or use shield when Crownerang is returning towards them. This allows Crownerang's return to be mostly non-committal in a vacuum, though the commitment on K. Rool's moves makes this point questionable. However, having a hitbox or form of protection in use enables far more follow-up potential, as K. Rool is avoiding the 17 frames of lag on Crown Catch, or 27 frames of lag from picking it up as an item. However, if at a disadvantage (such as being juggled) K. Rool players will often land with neutral aerial due to its low landing lag, or a neutral airdodge. It's common to see K. Rool using neutral aerial while landing to send opponents into the crown while executing a crown cancel, thereby making the interaction have him lose nothing.
King K. Rool can, use initial dash and jumpsquat to crown cancel. While precise in execution, this allows K. Rool to avoid the pickup lag and ensures he isn't taking unnecessary measures to prevent it. As such, this can aid significantly in his neutral game and advantage states. However, the precise nature often leaves him at a horrible disadvantage should it fail. Using jumpsquat to Crown cancel can allow K. Rool to chain Crownerang multiple times, often creating some strong horizontal pressure.
However, despite the benefits, crown cancelling has drawbacks. The main one is that it's difficult to use on a level that ensures K. Rool will not be punished. His own frame data (namely on FAF and endlag) makes it so that it often ends him up in a worse situation than if he simply took the Crown. Given that he cannot use it with movement without a well-timed initial dash or jumpsquat, players often opt for crown sliding instead. However, it has a place in King K. Rool's kit and sees frequent use regardless.
List of actions that can initiate a Crown Cancel
Hard and soft landing lag do not initiate a Crown Cancel, although a move's landing lag will.