I thought it was a pretty smooth curve… the end result was predicatable, though I didn't expect Penny's fate until the pause after the explosion where it seemed everything turned out ok… at that point, I was pretty much expecting it, but I think 8 seconds doesn't count for saying "I knew it was coming!" 

The act progression made it seem clear the general plot would end darkly..

It started in Act 1, where Dr Horrible is really just trying to both fit in and be a part of something, as well as trying to make the world better.  He THINKS he is evil, but really he is good overall, and at heart… In HIS world, he sees good as people like Captain Hammer… arrogant and self-important, attractive and shallow… just enough to get media attention and get people to like him (who don't know him), but to anyone with a brain, see through.  With that as a definition of good, I can see how he'd think he was 'evil'.  His application to the villains was more to find a group that would accept him..  But his definition of evil was to develop the proper persona, and … laugh… not to maim and slaughter.. in fact, his freeze ray was deliberately intended not to harm, just incapacitate, allowing him to gain power to save the world from itself… he didn't even seem to seek power for the sake of power, but to help people.

Act 1 complements that feel with the music, all major chords and with an air of hope and silliness.

Act 2 takes a bit of a dip, mixing the styles of act 1 with darker lyrics, mixed with more base human emotions such as anger, jealousy, humiliation, and rage.  The music takes on a lot of minors and jarring chords, a lot of mixed compositions that conflict with each other… the end of which he's finally pushed far enough by hatred and jealousy to even CONSIDER killing someone… but even then, he considers it doing good for the world, getting rid of a major blight and pestilence upon it, even though most people are blinded into 'believing' that blight is good for them… he knows better, and he will save the world by ridding them of it… and really, he's kind of right, but his being driven by such strong and base emotions leads him to make a poor decision as to execution…  Changing his freeze ray into a death ray, an instrument he'd previously never considered an option, adds the final punctuation to the act.

Act 3 has a lot of intense, jarring minor musical scoring, underscoring the action… driven by anger, his manner is a bit more unyielding, and he talks more about wealth and destruction and getting his due, but still in the name of social change and reconstruction.  Even at this point, Dr Horrible, while believing he's intent on his course, in the end ends up not being able to pull the trigger, even as he's talking about having no mercy… repeatedly, like he's trying to convince himself… if things hadn't gone as they had, I'm guessing he would have re-thought things and not gone through with the killing… of course, he didn't get the chance to back out, as Captain Hammer was able to screw it all up again. 

The guns backfiring initially leads to slightly upbeat moment, where it seems he's won, beaten Captain Hammer without killing anyone, and his face (amazingly well-acted, whether this was intentional or not) slides back into it's earlier countenance of more naively innocent evil than it was just a few moments before… everything is quiet, and he lets out a breath he seemed to be holding since half-way through act 2.

And then, of course, he sees what has really happened, and at first the score and his attitude are soft and sad… but once she's gone, everything is replaced completely.  All the music, all his expressions, everything, truly slide into what I would consider 'evil' .  His outfit change, attitude change (now he seems more interested in the greed and power aspect of evil, ignoring the social change and societal benefits), and the music's new feel all make it seem he's completely transformed.  The hallowness of the victory are echoed in the now obvious shallowness of his attitude… You could actually pick up a series from that last part and think he was just a standard evil super-villain.    However, having seen the earlier parts, it's obvious that either he's walled off the good parts of himself to deny the pain, or he so completely blames Captain Hammer (and the world for their blind faith in and sheep-like following of him) that he's completely overcome by rage, which burns away or completely corrupts what was good in him.

The final instant of act 3 makes it pretty clear that the first part is probably the truth, but you can really interpret the whole thing in many ways… but his denying that it hurts, his claim that everything is fine, but flashing back to his non-villainous persona, and the look on his face in the final flash, make it clear (to my mind, at least) that he's just blocking off those parts to stop the pain.

So… yes… I think it was perfectly executed, and I think it's a great turn of the standard 'comic' formula… not like it's never been done before, but it isn't COMMON to turn standards around quite so much… the hero is villainous, the villain is at heart heroic… until some trajic event shatters the hero's confidence and public appeal, at the same time crushing the villain's hope and truly pushing him into evil in its own rite…  typically it's shades of grey, but in this case it's more black passing itself off as white, and white trying to portray itself as black.  An interesting twist. 

The fact that the music perfectly transitions all of this, and that the songs are just catchy on their own anyway… in the end, I loved it, and am amazed at people who thought the ending should be different than it was… I could have imagined a thousand endings that would have worked, right up until that last moment, but once I saw THIS ending, it's hard to imagine any other seeming to fit at all… likely, there were other endings that would have been even more powerful, but I can't think of any of them. 

Edit:  Also, among the many things I didn't mention for lack of wanting to write an entire novel… I thought her last words to him would be enough to drive him entirely mad… really… given the rage he already was feeling, the sudden emotional impact of seeing her like that and knowing what was happening, the massive amount of blame for her condition she put onto Ct Hammer, having her last words being telling Dr Horrible it would be ok, because Captain Hammer would save her/us … I think that would be enough to completely drive him certifiably insane… far less has made far stronger people's minds shatter, and all of that striking at the same instant… I can't even imagine the weight of all of that on someone in reality… of course, being a work of fiction, it's obviously far different, but if something even close happened in reality… I think there would be tons of psych damage for quite some time.

Edit2: lol, I keep finding things I want to tell SOMEONE about.  :p 

But the complete contrast between the WORDS of his final song, or at least the transitional beginning, vs the mood of the music (going from sad soft minors to faster, harsher minors, progressing to fast, hard hitting minor 7ths), the situation, and the actions/facial expressions were REALLY well done, I thought… I have never seen and heard irony portrayed so perfectly before.  The words are completely victorious, but the double-meaning in the beginning, but leading into just one meaning shortly there-after…  I'm having a hard time describing how well that transition works, while still making such a strong implication that nothing is really changing, deep inside.  For an 'amateur' release (if you can call it that, given the resources used, both person and material), it has really somehow perfectly communicated so many things in so little time… I'm just…. … wow.

I don't understand how somebody could hate this ending.

No, I take that back – people with small emotional limits and idiots could hate it.

Anyways, the edning was genius. The only thing to have made it better would have been for Billy to have seen Penny get hit in the blast. I say Billy because, well, at this point, it's almost completely Dr. Horrible. But I guess that could also entail insanity, and he wouldn't have made it into the ELE, and the rest of the ending wouldn'tve occured.

Bah, whatever. The ending pwns.