I have recently seen some posts on how to do horror games. Inevitably someone posts something like "You can't do Horror with XXXX system."
To which I always mentally add "Maybe YOU can't, but the rest of us have."
Horror is about tone. It is about style. The system can support it, even add to it. Think about the game Dread and it's Jenga block mechanic or Call of Cthulhu and it's sanity system. Those are system supported horror. But can you do horror with say Toon or d20? Yes. But expect it to be a little different.
In d20 systems the characters will have more power as the level up. You could take the cheap path and up the baddies too, but that isn't horror really. You need to get them where their fears live. Even the most powerful character will find themselves in a situation they can't control or even properly understand. Lovecraft said it best, the greatest fear is the fear of the unknown. So keep players in the dark. The powers they have are not the ones they need. Modern supernatural books do a good job of this. When solving a problem Harry or Rachel have all the magic they need, but what they don't have are answers. They have allies, they don't have knowledge of who or what their enemy is.
What about Toon? Well if a picture is worth a 1,000 words then here are 100 score words to illustrate my point.
Toon + Horror:
Artist here: http://sideshowmonkey.deviantart.com/art/CASPER-ISSUE-41-by-Hartman-191809383
Yes that is the same Hartman who did animation for Rob Zombie. So Wendy here is cut from the same cloth as The American Witch.
I'll keep talking about how you can do horror in future posts.