Things that would have made Amnesia scarier

[cantremember]

Hallucinations like monsters appearing and then disappearing when they are about to touch you should be something that happens due to low sanity anywhere rather than a pre-scripted event.
I always lacked the incentive to really use the lamp and stay in light due to insanity didn't really handicap you much and just blurred your vision, and sometimes slow you down.

Monsters that never disappear and then start patrolling a pre-determined area if they give up looking for you. I felt too comfortable just going in a dark corner when the music changed and then walk around again when the safe-music came on again and I knew they had vanished forever. But letting them roam free too much would risk them blocking the only exit with their bad AI.