First, let me offer the caveat that it's always easier to look at someone else's work and say, "Oh, I know what they should have done," than it is to actually come up with the idea in the first place. Everybody's a critic, everybody's an editor, and most of everybody is wrong about how good their changes are. (I have had people send me "corrected" versions of my short stories. Suffice to say that I was not moved to incorporate their plot holes and forced expository dialogue.)
That said, I really do think that the final chapter of "Doctor Horrible" dropped the ball on a lot of levels. Act Two ends, for those of you who haven't seen it recently, with Captain Hammer telling Billy that he recognizes him as Doctor Horrible, that he can see that Billy has a crush on Penny (who is starstruck by Captain Hammer) and that he plans on sleeping with Penny just to crush Doctor Horrible's spirits. Doctor Horrible, who has been struggling with the moral dilemma of "kill or be killed" (he's been ordered to prove himself as a supervillain by murdering someone, or else face death himself at the hands of uber-villain Bad Horse) decides that he's suddenly got it in him to kill after all.
Act Three picks up a few days later. UM? Doctor Horrible has just worked himself up into a killing frenzy over the thought of Captain Hammer molesting his sweet, innocent Penny...and his response is to go home and think about what to do next? Penny, who has up to this point been portrayed as more innocent than Mary Marvel, gives it up to Captain Hammer? (This also has the side effect of making Penny look dumber than a bag of...well, penises, I suppose...because she doesn't realize that Captain Hammer is taking advantage of her for sex, which he couldn't be more obvious about if he tried.) And then, of course, the story ends with a good old-fashioned Woman in a Refrigerator, as Penny becomes nothing more than the toy that the two Important Male Characters accidentally break. What's Penny's reaction to finding out that Billy is really a villain? Does she hate him, or does she see through his facade to the innocent beneath? Does she ever see Captain Hammer for the heel he is? Who cares about her, she's just a silly woman!
So, my Act Three takes a step back. It's the night of the Big Date, as Captain Hammer takes Penny to the HammerCave. Before their date, Billy gives Penny a friendship bracelet, to show that even though she's dating someone--someone handsome and rich and strong and charming and...**chokes down bile** Anyway, he still cares about her. In a strictly platonic sense, of course.
But secretly, the friendship bracelet has a tracking device hidden inside. When Captain Hammer takes Penny to the HammerCave, Doctor Horrible will follow them! And once you're inside a super-hero's secret hideout, they're always powerless against you. It's like you're in their underwear or something. Armed with his freeze gun, Doctor Horrible stalks the couple as they go on their date.
Of course, the date is all about CH making hideous faux pas after hideous faux pas, but still charming the innocent Penny with his smarmy manner. DH watches, his rage growing, until finally he takes her back to show off the HammerCave...and DH follows in after them. He stalks them slowly, waiting for just the right moment to strike...
And doesn't get the chance. Instead, Penny whips out a compact paralysis beamer from her purse and blasts the (stripped down to his boxers) Captain Hammer with it! As he gapes at her in immobile shock, she gloats at him--did he really think that anyone could be that sweet, that innocent, that pathetically naive? A homeless shelter? Pah! A perfect cover for a true supervillain, allowing her to pretend to be kind and decent while secretly reveling in the misery of others! A perfect place to hide for the soon-to-be-newest member of the Evil League of Evil...BAD PENNY!
Suddenly, Doctor Horrible leaps out of the shadows, filled with outrage. Penny can't be evil! She's the sweet, innocent girl of his dreams that he loved from afar! She can't have...lied to him? Penny, of course, points out that he's simultaneously confessing that he's a supervillain while complaining that she lied to him about being innocent, but he kind of misses the irony. The two of them do battle, causing rockfalls and explosions in the HammerCave. (Cheap rockfalls and explosions, natch.)
In the end, Penny is lost under the falling rocks. Doctor Horrible is about to let Captain Hammer perish as well, but realizes that while true loves come and go, a really good enemy is irreplaceable. He submits his victory over Bad Penny as proof that he's truly bad to the bone, and is accepted into the Evil League of Evil. (Yes, Penny still dies, but she dies as a well-rounded character with her own goals and drives within the story. And of course, during the stinger, we see her sitting at the edge of an underground pool, trapped behind tons of rock, but still alive. "I'm Bad Penny," she whispers to herself. "I'll keep turning up.")