A question for y'all

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One of the reasons why I found the original ATDD so scary is due to that, before I encountered any monsters, I felt very scared of how the game was going to kill me. By that I mean I wasn't so much afraid of dying as I was afraid of what the monster would do to me before I die.

I wanted to feel as if I was in Mandus's shoes, and so, yeah, I was nervous to know what happens when you die, but when I saw how I felt less afraid.

Exactly my thoughts. I think the next big hurdle in the evolution of horror games is finding something other than player death and savepoints as a consequence for failing.
We already got rid of combat and are experimenting with finding alternatives for traditional ressource management and item-based puzzles (whether successfully or not is open for debate), but we're still stuck in the mindset of healthpoints and die-and-try-again. Games like Amnesia are forced to make sure the game is easy enough that the player rarely dies, because they have to hide the fact that dieing is actually nothing to be afraid of...

For me, the monsters aren't intrinsically scary. They're scary because of WHAT they are, HOW they were brought about, and what they represent. The way they appear is only a fraction of what makes them frightening.

I agree... maybe this means the way to go is not trying to startle the player or show him disturbing imagery, but to give him an actual reason to be afraid of getting caught by enemies? Not mere gameplay repercussions, but consequences related to the setting and story, that stay "inside" the game world.
Very simple example: Imagine you were playing as a prisoner instead of Mandus and you were trying to escape from the machine. You don't fear death, you fear what would happen to you if they caught you and dragged you back to your cage... I think with the proper setup, a game could maybe succeed in making you feel this fear.

One experimental game that I found to have an interesting approach is I Can't Escape btw. A very short and simplistic flash game, but with a nice idea of how to induce a feeling of helplessness and rising panic in the player...