Complete Monster: "The Cloaked Man", the Big Bad of season 2—actually Vice Principal Stern—is an arrogant, cold-hearted, and genocidal wizard. Desiring to wipe out all vampires, despite knowing that they are not all evil—and that some are even his students—he starts his operations by summoning the breath of death, a demonic mist that drives all infected vampires mad and forces them to kill each other, before Ethan foils his plan. In retaliation The Cloaked Man stalks Ethan into an alternative dimension and tries to directly murder him and his friends. Upon finding out Ethan is a Seer, The Cloaked Man curses Ethan to hallucinate everyone is dead and that he’s failed them all, just to make sure he doesn't cross him as his plans near fruition. The Cloaked Man also gets his hands on the Lucifactor, an energy-draining weapon of incredible power, and goes on a killing spree before planning on using the Caller beacon to project the Lucifactor's energy, wiping out vampires en masse. During the climax, to prevent Ethan and Sarah interrupting him he uses his magic to force Ethan's friend Benny to try and kill them.
Moral Event Horizon: Jesse crossed it when he bites Ethan to force Sarah to give up her last chance of humanity. Although he claims to have done much worse.
Nightmare Fuel - The first episode gave us the zombie animals...especially the dog
The episode Guys and Dolls has that doll that's turned into a 30 year+ woman obsessing (ala pedophilia) over the main character's little sister. Not to mention her falling apart and getting damaged and draining the life force out of humans (and vampires) and turning them into dolls.
Later at the end of the episode when Debbie Dazzle has been turned back into a doll, while all the characters are dancing, she turns her head and winks.
Possessed Rory in "Die Pod" (the special effects worked a little too well), and possessed Sarah in "Three Geeks and a Demon".
Evil Sarah in "Independence Daze", on a psychological rather than visual level. The idea of sweet, lovable Sarah turning evil is terrifying.
So Bad, It's Good: Mainly because it tries too hard to be dark, leading to a lot of Narm. That, and the special effects.
Shifting towards just plain good in season 2, with some genuinely witty dialogue, subtle characterization, much improved acting across the board, and an even more post-modern, satirical sense of humor. There's still Narm, but it works and adds to the fun. So of course it had to die.