Not knowing what the hell is going on is part of the point (and the horror) of the film. Everything after Max watches Videodrome for the first time is suspect. He could be nuts, he could be externally controlled via post-hypnotic suggestion and we're seeing it through his hallucinatory eyes... or it could be a faithful rendering of what the hell is actually going on: the Videodrome signal generates a tumor that not only causes the target to hallucinate but also unlocks reality-warping powers... under the control of a mind going mad due to the tumor, so the hallucinations don't so much become reality as reality becomes the hallucinations. The medium is the message, after all.
With an initial pass-through, sure, it's easy to say that it's visualized through Max's hallucinations. After all, he mostly perforates people with his gun, no matter the biomechanica squick involved. The problem is that all explanations occur in the hallucination phase and so can't be trusted either, and several things happen that don't make sense outside of the Videodrome hallucinations being some kind of real (Harlan's hand being converted into a stick grenade, for example). There's just enough weirdness that a real-world "it's all in his head" explanation doesn't fit unless it becomes degenerate to the point of nothing after a certain point is real at all.
The core horror, therefore, of Videodrome is that there's this signal that is not only supposed to make you go crazy and then kill you, but makes everything uncertain. The medium is not only the message but also the reality; O'Blivion's "television is the retina of the mind's eye" sounds a lot like O'Brian's speech in 1984 about how The Party can control objective reality by controlling subjective reality. Metaphorically, by molding thoughts, television molds reality itself. Videodrome makes this explicit (in more ways than one).
Edited by Scolopendra
"There's just enough weirdness that a real-world "it's all in his head" explanation doesn't fit unless it becomes degenerate to the point of nothing after a certain point is real at all."
Still, it's possible to construct a relatively realistic account of what's happening. The video used some form of hypnotic suggestion to induce him to do things including assassination. It isn't all in his head, but his perception of the events is distorted: so, for example, he's holding a real gun and merely hallucinates that it's merged with his flesh. (I say "relatively realistic" because it's still the Manchurian Candidate mode of brainwashing seen only in fiction; however, at least it can be understood in a more straightforward light than the surreal events we witness on screen.) I'm not saying this interpretation is the only valid one, but it does provide a plausible way of looking at the film in a less bizarre way than what we may initially assume is the case.
Since "this troper thinks" shouldn't be on actual pages, I'll work the discussion here:
"I just watched this movie, and looking around the Internet, while I've seen much discussion of the movie's overall themes and message, I've seen surprisingly little discussion of the central question nagging at me as I watched it: what in the name of Jesus H. Cronenberg is happening in the film? Taken at face value, the movie is filled with bizarre supernatural events that lack even the slightest rationality to them. The explanation given in the film itself—that the video gave the protagonist a brain tumor causing him to experience wild hallucinations—doesn't make a whole lot of sense. What sort of brain tumor would lead to controlled hallucinations that Videodrome could direct, let alone use as a means of brainwashing him? My best guess as to what's really supposed to be happening is simply that the videos have used some form of post-hypnotic suggestion on the protagonist, and everything else that we see is simply how he perceives what's happening—his mind's symbolic (and somewhat Freudian) interpretation of the events." ~marbehraglaim
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