I commend you on having a far more universal criteria than I. When I evaluate the quality of a horror movie, I examine its effectiveness as well as its contribution to its specific subgenre of horror.
I use the term subgenre in a very general way. Obviously, subgenres aren't absolute classifications. Different people may hold different ideas of what constitutes a subgenre, and a single horror move may have characteristics of multiple subgenres.
Some critics argue that all horror movies can be classified according to three subgenres: horror of the psychological, horror of the demonic, and horror of armageddon. These are apt and reasonable descriptions, and I do use them. But I tend to be more malleable in my classificaions, and I borrow from multiple sources.
In my opinion, there are many more horror subgenres: slasher (Halloween, Friday the 13th, Nightmare on Elm Street, Madman Mars); cerebral (Alien, Hellraiser); technological (Scanners, Fear.com, the Ring); monster (Mothman Prophecies, the Haunting, Dracula); natural world (Jaws, Orca); psychological (Silence of the Lambs); splatter porn (Saw, any Rob Zombie movie); postmodern (Scream); etc.
Another subgenre of horror relies on a constant build up throughout the film that culminates in a final, potentially horrifying climax. One such movie is the Blair Witch Project. Another is Audition, which is a Japanese horror film that I highly recommend. These kinds of movies tend to be plodding, but I'll forgive the slow development if the final payoff warrants it.
I apologize for being wordy, but I'm trying to explain the basis of my reasoning on Blair Witch.
In my opinion, Blair Witch has four extremely effective scenes:
1) Heather initially filming and recording the inexplicable noises in the forest.
2) The crosses hanging form the trees.
3) The invisible children striking the side of the tent.
4) The final scene with Mike standing in the corner.
These scenes build upon one another, creating a mounting tension throughout the film, and the first person, documentary-style cinematography allows the audience to internalize and personalize this tension.
Of course, I don't necessarily like movies simply because they're effective. Saw was an effective movie that I didn't like; I'm simply not a fan of the splatter porn subgenre.
Some horror movies aren't at all effective and can actually detract from their subgenre such as Friday the 13th and House of a 1000 Corpses.
And some horror movies are crowning jewels in their subgenre and excellent films. Two of my favorite horror films (and ones that, in my opinion, represent excellence in their area) are the original Halloween and Alien.
