Everyone escapes into a fantasy from time to time—some (Trekkies) more than others—but few let it get quite as out-of-hand as Harlan Carruthers (Edward Norton). He's decided that he's a cowboy, the hero of his own imaginary western, and he refuses to see otherwise.
Tobe (Evan Rachel Wood) finds Harlan working at a gas station and invites him to the beach, an invitation he's happy to quit his job to accept. The two quickly become intimate, with Tobe more than willing to be swept up in the romance of Harlan's fantasy, which wins over her alienated younger brother, Lonnie (Rory Culkin), as well. Tobe's father (David Morse), however, objects to the courtship. He knows that as charming as Harlan's imaginary alter-ego is, it's an alter-ego that carries two very real six-shooters. When Harlan takes Lonnie out to the wash for target practice, Tobe begins to get an inkling of how dangerous this fantasy might be.
Down in the Valley succeeds because Norton initially makes Harlan endearing. At first, his uncommon cowboy principles and social awkwardness make him likable ... until you realize that he can't turn it off—that there's a deeper pathology that makes it impossible for him to function in the real world. In many ways, he's Travis Bickle with spurs. You go from smiling at his odd behavior to pitying him for his inability to behave normally in key situations to fearing how far he'll go to sustain his imaginary world.
The problem is that reality and the fantasy clash too often. To keep the fantasy alive, Harlan has to do things that are unacceptable in either world and then lie to himself. This is his most disturbing quality. It frees him to commit any atrocity because he need only doctor his fantasy's history to live with himself.
Writer/director Jacobson fills the film with western imagery, but always sticks something modern in the background to keep Harlan's elaborate game of make-believe under assault. In a perfect world, Harlan could've been a good ol' boy, but that world exists only in his head.