At the end of the story, Batman kills the Joker
Grant Morrison himself is the one to voice this interpretation of what happens
. He also notes that while certain elements of the story have gone on to be part of Batman's official history (Barbra Gordon being paralyzed), Morrison says that this is a possible final Batman story, an Elsewhere story if you will.
If the above is true, then Moore's disdain for this story makes sense
Two years before The Killing Joke, Alan Moore created his farewell to Superman's silver age, Whatever Happened to the Man of Tomorrow. If the Killing Joke is meant as a finale for Batman, then Moore is essentially copying his own premise onto a different character. The details of the two stories differ, but the idea of the 'end of an era', a farewell to a version of a character is something Moore wouldn't want to directly revisit. Moore plays with the concept in Supreme, looking at the genesis of a hero and villain separately, but his disdain for the one of the quintessential Joker stories arises from its basis (in his mind, if Morrison is correct) as a copy of one of his earlier works.
The very end of the story represents Batman seeing through/acknowledging the Fourth Wall at last.
A sort of alternative to the "he kills the Joker" interpretation
, which I find to be a tad unimaginative. The idea that the Joker has No Fourth Wall
is well-known, and is sometimes touted as a reason for why he does what he does - after all, who would care for the "lives" of a bunch of ink-and-paper constructs? For almost five decades, real-time, the Joker relished in his status: since he knew he was one of DC's most popular villains, he knew that he could never die, and that for the most part, he could do as he liked as long as Batman beat him at the end of a caper (but never permanently
). As time went on, however, the sheer repetition wore on him; his awareness of the fourth wall meant that he could sense time passing in real-time, and remember every single adventure, while everyone else "reset" their memories as needed
. Everything came to a head in TKJ, where the Joker, so utterly desperate to break the cycle and free himself from his endless obligations as Batman's Top Villain, went out and committed the most disgusting atrocity he could think of to shock Batman into admitting that their lives are only a comic book, where conflicts and character are defined by the necessities of the plot and nothing else. And after that... hell, he could very well have been aiming for Batman to kill him, so he could be freed of the cycle
Whether or not the Joker succeeded at this (not to mention how much he succeeded) is a matter of further debate. Batman's laughing breakdown
at the end could signify that he, at least to an extent, acknowledges that his entire life is nothing but words on a page created to entertain some bored civilian populace. But then, Batman's further offer to "help" the Joker (an offer that the Joker knows holds no water, since DC editorial would never let him be reformed)
could imply that that doesn't matter. They're still characters in a comic book, bound by the rules thereof, and they couldn't break free if they tried.
I mean, surely it's not a coincidence that when Batman gives the first "heh", he's staring directly at the audience?