Best Of/Worst Of Our Characters
I have that I have to give a caveat on this one. I've seen commentary on this episode in which there are complaints about the "Ugly Man" not being an impressive villain and how Buffy looked pretty lame in not being able to fight him off. I'm discounting that in this poll/observation post as a weak character moment for Buffy. I've always felt that Buffy couldn't fight the Ugly Man, because we are in Billy's nightmare during that attack. He couldn't allow Buffy to kick his nemesis' ass, or it wouldn't be a Nightmare Twist of the reality around him.
So for this list, we're discounting anything that happens from Billy's point of view that would have a negative affect on our characters. When he's there, we're trapped in his POV.
Our Characters Are Awesome People!
Buffy: Buffy took an horrible situation and turned into in a positive strength. Despite being turned into a vampire, she retains her control and uses her strength against the Ugly Man ... and does so despite Billy's nightmares that no one could help him.
Xander: Xan faces his nightmare, punching out the clown from his childhood and laying that fear to rest. And, he's the only one to face down a fear.
Willow: Willow doesn't have any powerful character moments in this one. I guess I'll give a nod to her (and Giles) being the one to tie what is happening in Sunnydale to nightmares.
Giles: Giles is able to make the intuitive leap from nightmares intruding into reality to Billy's appearances around the school that starts everyone off toward a resolution of the problem.
Cordelia: Cordy doesn't get any positive shout outs in this episode.
Our Characters Are Not Impressing:
This is going to be another tough one to sift through, because our character's weaknesses can easily be specifically due to the warping of reality into nightmare. In those cases it really isn't a weak character moment, because it is being induced mystically. But, let's take a look and see if there is anything outside of nightmare-induced behavior that is less than admirable:
Buffy: I don't think I can slam Buffy for any of her behavior or actions in this episode. Any signs of weakness she had have been because she's in a nightmare-warp and so couldn't help it.
Xander: I don't care if Xan was in a nightmare setting. He should have been more than a bit suspicious, since he knew what was happening, when he saw the carefully laid trail of chocolate in the hallway. Even I recognize when I'm being led into obvious traps in my nightmares... I can't always change things, but I do recognize a set up.
Willow: The same thing with Willow -- why would Buffy be calling to you from the boiler-room-of-doom, and yet not respond to your calls, Willow? You know that freaky-schtuff is afoot!
Giles: Sometimes, Giles seems to make choices that are designed to get Buffy into trouble with her 'normal life', even though he knows how important it is to her. Here, he sweeps her off to question Laura in the middle of the school day. There was no reason this couldn't have been done after school, or even by himself.
Cordelia: Cordy's nightmares give us insight into her character, and it isn't a shock that she really holds the "nerds" in contempt. She's just not a nice person.