Mark is the ultimate tragic villain. From a Freudian standpoint, his psychosis is virtually engineered by his father. Played with such sadness and longing by Carl Boehm that you just want to give him a hug—especially when you see footage of him as a child shot by his father. Those scenes, of a childhood Mark watching people make out in the park, or waking up in the middle of the night screaming, with spiders being thrown at him, are some of the most gut-wrenching in all of cinema. They are far more terrifying than the ones of Mark killing.
And that, perhaps, is the key to Peeping Tom: we, the viewer, are made implicit in the pain inflicted upon the characters. Mark’s pain, the pain of the girls he kills, the pain of the actresses being tortured by their directors. We are also sympathetic to the victims’ situations, so we find ourselves like Mark: pinned to the screen with the projector spewing images at our backs. Perpetrator and victim.
(Here’s a link to my 24 Words Per Film entry on Peeping Tom.)