Billy is one of the most unique episodes in the Buffyverse and a definite highlight of the entire series. It's nerve-wracking and scary and raises the bar of Season 3.
The main plot is absolutely standout and one of the most original concepts of the entire show, which is incredible as the 'verse is entering it's 8th season. Right from the start, we know we're in for something special when Gavin assaults Lilah in her office and this scene sets the tone of the episode. Billy is a great villain; he's absolute evil yet so polite at the same time. He doesn't even kill people, as he points out, he just likes to watch women getting beaten and murdered. I was glad he was only in one episode though as there wasn't much to be explored after this episode.
Also, we finally felt sorry for Lilah! To see the uber-bitca so scared and beaten was awful, especially cuz I have a soft spot for Lilah. She looks out for Number 1 all the time and as seen isn't necessarily pure evil, as seen here when she kills Billy and in Carpe Noctem when she helps Angel with the building code violations. Stephanie Romanov is so good at her and has definitely grown over the seasons- she's a joy to watch. Cordy and Lilah's scene in Lilah's apartment was classic and made me remember just why I love Cordy so much- she's hilarious at times but also such a strong woman and it was nice to see a glimpse of the old her and her remark at Lilah "I was you" made you realize how much she'd changed from being a "vicious b!tch" to a mature, selfless young woman and it actually miss Cordelia, as I know after S3, the real her doesn't appear until S5. However, the real highlight of this episode was the hotel scenes between Wesley and Fred. God, they were terrifying. Alexis Denisof was just outstanding in these scenes- he had such an amazing presence and was so frightening and every time I watch it, it still gives me goosebumps to watch him chasing Fred with an axe. This could have looked silly but it just looked creepy, and is one of the highlights of the series. The music propelled it even further, with the mix of the Cordelia/Connor music from S4 and the Darla melody from S2, going from a slow, eerie feel to a pulse-pounding feel when the chase scenes first appeared. Fred showed her inner strength here, a massive step up from the timid person she was just a few episodes ago. Also, the beginning of Fresley!
Billy was a sublime episode and a series highlight and should definitely not be missed under any circumstances.