This episode made me think of nothing so much as Sarah Rees Brennan's essay "Making Out with Frankenstein's Monster," and especially this quote:
So how do people write the monster as alien and shocking without sending the message: keep the window barred, go down to the storm cellar, never grant entry? If the monster is alien, how do we make it sympathetic without making it human?I think the show does a better job of exploring this question than a lot of fans give it credit for: those who are shocked at the "change" in Stefan's character and claim to have gotten no hint of it before clearly have not been paying attention. We've suspected that Stefan could be "worse" than Damon all along, and not without textual support. Why did people think he was called Ripper, anyway?
So the real surprise of this episode came not in Stefan's behavior, but in Klaus's intentions: we've heard for some time that Klaus had specific reasons for coming after Stefan, and it turns out that one of those reasons is just that he's lonely. He wants his friend back. It's completely adorable, in a terrifying sort of way. And this is one of the most effective (and, perhaps, easiest) ways to make a monster sympathetic but not human: make him crave love and companionship, not as a path to reformation, but rather as a concurrent need as he runs around killing everyone and wreaking havoc. A monster who is pure, emotionless evil is just an antagonistic force. A monster who declaws himself for love is boring. But a monster who needs both friends and victims, at the same time - then you've got yourself an interesting character.
And then we have Caroline and her father. Oh, poor Caroline. From our point of view, of course, Caroline is more or less the same sweet girl we've always known, and Bill is the monster. But it's worth considering how Bill sees things: he's been trained to kill monsters. That's what he does. And now the monster is his own daughter - literally a monster in the family, as Rees Brennan puts it. So the fact that's he's trying to "fix" her instead of killing her, however abhorrent his methods may seem to us, is actually, from his point of view, an incredibly brave and generous step. Caroline needs love, needs her daddy, but Bill can't see that yet. Perhaps in time. And it's worth noting that Bill's method of conditioning her to be something she isn't bears a striking resemblance to the philosophies of the ex-gay movement, which is interesting coming from the one gay character on the show. Sure, Caroline wasn't born a vampire the way Bill was born gay, but hopefully he'll come to realize that it's now an involuntary part of her, and be able to love his daughter again, as she is.