I've seen discussion on Act III (including the 'Is it a Dream'?) and I think it all boils down to Billy's Choices. And he *never* picks Penny, not once. He always chooses the path of Dr. Horrible, every single time.

ACT I:

The heist, Penny asks him to sign and he talks with her, but blows it because he's focused on the heist.

Out of control van: He doesn't get Penny out of the way (sacrificing the van and heist) he instead keeps trying to stop the van.

Penny or Wonderflorium: Dr. H- believes he saved Penny (with the remote) and is upset…but chooses to flee with the loot.

He never chooses Penny, not once.

ACT II:

Billy is stalking Capt. Hammer and Penny…but who's he more focused on?

-Soup Kitchen: Billy/Dr.H isn't helping the homeless, he's dumping soup back into the pot, and handing out empty bowls, while glaring at the back of Capt. Hammer's head

-Park with yogurt: Billy/Dr.H in the bushes again appears to be looking at Capt. Hammer (though you could argue he's just looking at them of course).

-Pond (with boat) Billy is looking at Penny, but then turns to watch Capt. Hammer (amusingly at the 'Look at me' part) and his head goes back and forth between them…

My thoughts? He's stalking both of them, not just Penny. If we seperate 'Billy' and 'Dr. H-' then Billy watches Penny and Dr. H- is watching Capt. Hammer.

When Dr. H blogs about the situation it's unclear if he's more upset over the situation with Penny in general, or the fact that it's Capt. Hammer…with the girl who should be his!

Penny as a pawn comes even more clearly into play when Capt. Hammer confronts 'Billy' at the laundrymat, and tells Dr. H- he's going to have Penny because Billy wants her. And then goes on to expose himself as the ultimate douche.

Billy doesn't try to tell Penny or stop her in any way, even though he knows Capt. Hammer (the hammer is my penis) is taking her back to his 'command center' blahblahblah. Instead Dr. H sees it as a solution to three problems:

-He needs to kill someone to get into the Evil League of Evil

-He wants Penny

-He wants to beat Capt. Hammer

Dr. H isn't into the whole…murder thing…but this is pushing him over the edge because he's angry. But his choice isn't Penny. There are plenty of other potential choices there he could make, and once again he doesn't choose Penny, but chooses what works best for Dr. Horrible.

ACT III:

Dr. H chooses to confront Capt. Hammer publically at the homeless shelter dedication. This obviously would ruin Penny's event.

Dr. H chooses to kill (his plan was to) Capt. Hammer publically at the homeless shelter dedication in front of Penny. (He laments this choice briefly but doesn't appear to change the decision).

Dr. H while monologuing, is destroying the room. I presume it was actually part of the shelter. So he's trashing the building for homeless people…which is Penny's project.

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Point being in all three acts, there were things Billy and Dr. H wanted. It's obvious what Dr. Horrible wanted: social change, money, prestige, a place in the Evil League of Evil, to defeat Capt. Hammer…etc. Billy wanted Penny. But they're also not two seperate people, which is why Billy sings about his freeze ray to stop time with Penny so he can say and do the right things to win her over.

Ultimately every decision Billy makes is selfish and self serving towards his ends as Dr. Horrible. He never once chooses Penny or makes sacrifices for her. And so Dr. Horrible gets everything he ever wanted, except her. (Which of course he seems to realize too late she is everything he ever wanted).

Ironically Capt. Hammer, while the ultimate douchebag (I think I dated him once) actually does far more good than Billy/Dr. Horrible. All his actions are self serving and selfish as well, but he does things for others to get what he wants. He gets Penny her shelter (or helps, we don't know really how much of that was him other than his bragging) which is what she wants, and he helps the homeless…even though his motives are horrible. Capt. Hammer's actions look heroic, but because we know his motivations we know he's a douchy douchebag.

I felt like the entire series was questioning, "What is a hero?" Penny was heroic in very human way, she cared and she took action against the social wrongs she saw. Billy bitched and blogged about them (and when he did take action, it was selfish). Capt. Hammer made himself look good, but didn't give a damn about anything but how he looked doing it. Had life gone on, he'd have moved on to something else rather quickly, while striving to stay in the spotlight. Where would the shelter be then with a Capt. Hammer type? Penny would maintain and fight for it.

That's what I got out of it. Billy is a bad guy, but not in a black and white sort of way. He's the villain because of the choices he makes. Capt. Hammer is a phony hero, and while it's annoying people like him cover themselves in glory (Oh look! Superstar Soandso went to Africa and sang for the village…aren't they AWESOME?!) it stops when we stop feeding into it and look away.

And the Pennys of the world are the people who make the difference. The quiet unsung heroes. Who uh, end up dead with shards of plastic in their belly.

Well done!

Excellent analysis.

One thing worth pointing out is that Billy is potentially a mirror of Penny.  From the song in the second act, Penny tells Billy where she was and where she is now.  Instead of choosing a path that would lead him towards the same conclusions, he pursues the path that leads him to kill "Billy" and become "Dr. Horrible."  I think it's easy to see that Penny may have been like Billy at one time, but instead of choosing to excise the "plague" of humanity, she chooses to treat humanity with kindness.

They both really wanted the same thing.  Unfortunately, Billy was too blinded to realize what he had and where he was going.  He chose his path and unfortunately Billy and Penny paid for it.  At the end, only Dr. Horrible remained.

That's an interesting theory re: "Hammer meet nail". I had wondered about that line, although it may just be poetic license. With regard DH's hesitancy in pulling the trigger, I think he looks like he is psyching himself up. There is very little time between the line;
"Here goes no mercy" and the sound of the freeze-ray powering down, which causes DH to look around & CH can smash him. Imo if the freeze-ray doesn't fail, DH shoots him in the face. I say this because it just felt like DH was committed to a particular course of action (like Mr. furious said) & had no way out by the final scene. The opening number to act 3 features DH in his lab & he sings the lines:

"There's no happy ending/so they say/should I stop pretending/take a chance and build a brand-new day"

We see in split-screen Penny at the laundrette, DH would know it was laundry day. Should he "stop pretending" & "take a chance" meaning go & see Penny. No, he chooses to complete his plans & attacks CH. BTW if DH had killed CH then Penny (who by this time knows DH is Billy thanks to his "head up Billy buddy" line) would, imo, reject him & without her we get the same ending. Locked on a path, no escaping his destiny to become Dr. Horrible for real.

I thought he had committed himself to it — but was still hoping against hope that somehow something would save him from having to do it.

If he was really one hundred percent comitted and ready to do it, he would have done it. He wouldn't have monologued. He wouldn't have had to give himself a pep talk. And when the freeze ray made not good noises, he would have shot quickly, then checked what was wrong with it rather than lowering the gun and turning around. However, he delaydelaydelayshesitateshesitates, and then turns away at the first excuse.

It's interesting to compare this with Captain Hammer's willingness to kill — he doesn't hesitate because the gun he's holding is crackling and making funny noises. Which is ultimately what dooms all three of them (although we have to give DH his fair share of responsibility as well).