Please don't list this on a work's page as a trope. Examples can go on the work's YMMV tab.
Nightmare Fuel: A Nightmare on Elm Street Part 2: Freddy's Revenge
Freddy cutting and tearing his way out of Jesse's body.
When Jesse walks in on his sister singing the "One, two, Freddy's coming for you" song.
The entire premise of the movie. What's worse than fighting an undead reality-warping dream demon that's killing your friends? Having that dream demon possess you to make you kill your friends.
Earlier in the movie we're presented with an example of Paranoia Fuel. When Jesse begins dreaming of Freddy he sees him inside the basement from the outside of his house. Imagine the idea of going outside your house at night for a minute, when everyone's sleep. Then you look into the basement window and find a strange man who somehow managed to get inside and is taking out a glove fitted with knives on each finger out of the boiler. You have no idea how he got inside, your family is still in the house, and you've got no idea if you're fast enough to get inside before either running into him or before he gets to your sleeping family.
Freddy himself looks his best (worst?) in this, with creepy red eyes, and skin with a... moist quality to it.
What makes this even worse is that this was the first movie where Freddy has ever been seen in a fully lit room. Seeing his burned face in a dimly lit, shadowy area is scary, but being able to fully make out that face in a brightly lit living room is by no means comforting at all.
The implications that Coach Schneider is a Depraved Homosexual and a sexual predator who lusts after his young male students, and may have very well been planning to rape Jesse.
Freddy attempting to murder Jesse's little sister, which is one of the few times in the series where it's made perfectly clear that Freddy Krueger is a man who enjoys murdering children for fun.