In the final level (warning, partial solution follows), after you begin rewinding time and slowly progressing back to the beginning of the level, the events that play out look as though the princess is not only trying to escape from you but also to kill you. Twice, in her "reversed" state, she activates switches that lower or block off ladders that you could have used to climb up to where she is, given a moment more. As you chase her farther and farther out from her house, you narrowly avoid her dropping a chandelier on your head, and at one point she drops the platform you're standing on into a fiery spike pit.
Also note that before this, chandeliers were associated with the "boss" monsters at the ends of two worlds. This only reinforces the revelation that Tim was the monster all along.
During this sequence, releasing the rewind button does not restore control to the character. You're forced to watch the consequences of your actions.