Honestly, not only do I agree with everything in this post about horror on stage, but it's also written in a very similar process to how I like to approach those kinds of questions. The question is distilled at the beginning, and the different elements of the solution are laid out -- including one that specifically addresses the medium of theater.
Here's all I'd add: whenever the question "How do we handle _____ in the theater?" is raised, I start my answer with the human body.
SPECTACLE
For instance, on Twitter the other day, HowlRound started a conversation about "spectacle" on the stage. Now, Bob Wilson aside, the "spectacle" on stage that I am most drawn to are spectacles of the human body. For instance, the show we are working on right now is a spectacle of human bodies:
The play has a story about two boys who are trying to discover an "epic story of heroism," so the scale of the heroic fights -- 25 people in a small theater, all participating in one massive sharply-choreographed fight -- creates the sense of "WOW HOW IS THE HUMAN BODY DOING THAT!"
It works on stage because there's a real respect that the fight choreographer can get from doing his job well. On screen, we're so used to it being faked, that the fight scenes can be as incredible as you like -- say, 300 -- but still fail to impress because you know that it's not hard.
On screen, what works is when they manage to show something real which you couldn't even imagine. That's what I liked about Sin City (but not about 300), the moments where the depravity literally exceeded my imagination.
HORROR
So, how does the human body accomplish horror? Simple: by having a human being be incredibly horrifying, up close and personal.
The most horrified I've ever been at a theatrical production was not by something gruesome or bloody, but just be someone being horrified. It was a scene from William Mastrosimone's Extremities, early in the play, when an unidentified man tries to rape a woman at home alone. The rape itself was brutal and physical, but really what was horrifying was how Mastrosimone wrote the dialogue; the way the rapist spoke and stood in the room that made your flesh crawl, and having a real body in close proximity to me in the audience underlined that.
CONCLUSION
What's truly horrifying or awesome in theater is what people can do. The evil they can perpetrate, the feats of agility, the brutality and the passion; these are tools which the theatermaker can use to harness spectacle or horror on stage. When an effect's impact is the fact that real human bodies are doing it, you're on the right track.
