I'm willing to bet that those badge thingy majjigs record (somehow) how much fear she has caused or been in the presence of (or something along those lines). She spends nearly all her free time with Tim, whom it has been established is more afraid of Shadow than anything else (though not for typical reasons). The only difference between her last inspection (which we can assume went horribly) and this one which is apparently drastically better, is Tim. More evidence of this was shown the first time we see her world in which her presence in Tim's fear was nearly crippling as she had to take a moment to gather her senses before moving on.
My own personal theory is that Shadow becomes the star in her world, taking for granted the amount of "progress" she's making. Tim starts to feel more comfortable around her and his fears lessen and lessen, which in turn allows Nightmare to start catching up. Shadow, suddenly losing her comfortable position and afraid of becoming the bullied kid again, begins making choices and doing things to keep the fear up, at Tim's expense.
1. what you said
2. the monsters inc. hook. tim fuled it with something else
3. them horror movies had something to do with it. maybe tim's fear during the movies. maybe something else.
personally i don't think 2 because that, as said, is an explored concept and jiveguru seems good enough to have made his own universe mechanics.
yeah, the main reason I predict rough times ahead is because one of the first chapters introducing how they met was "Learning Curve" and Tim said in the intro chapter that it wasn't always easy, but we have yet to see any major difficulties.
Yes, the Crimson Cunt is most likely going to crank it up. But really I mean everyone else. You know how there's always that one person who hates you and you don't give a **** ? You LIKE that they hate you? Well there folks is the Crimson Cunt (love the nickname), but everyone else may start trying to be friends with her (like in How To Train Your Dragon when everyone thinks Hiccup is a good dragon fighter).
Because it's annoying to keep track of. No other website I've come across does it and I'm not going to keep a list of random names just for one website. Subscribe to me if you want to keep up with my work.