Something else that my friend likes to use when he, on occasion, DM's, is a bit of misdirection, to make a baddie appear far more powerful than he is.
In game, we had just returned from some dragonslaying, and were feeling pretty cocky. Going into the local inn, we were met with the Kingsworn, who were the King's personal bodyguards (could flatten us without thinking.) While we're partying and enjoying the merriment, a sudden cry from outside causes the party to come grinding to a halt. A mangled body bursts through the door, followed by a half-demahl (Demahl's were very scary monsters, my friend's creation). This guy tears apart the Kingsworn, until the wizard, impaled into a wall, uses the last of his energy to knock the monster down and yell "Run!" Well, we ran, tails between our legs.
Turns out those weren't the 'real' Kingsworn, and just body doubles for 'celebrity' effect. We then sought out and killed the half-demahl, feeling justified. But just as we were about to leave, the forest around us erupted into the wardrums of the Demahls.
Take each situation and always seem to move them from the frying pan back to the fire. It's quite scary, and works well.
Another fun thing to do is to take any 'stupid' things the party does and turn it against them. In one of my games, they ran into a haunted town that only appeared at night, and vanished in the daytime. Each night, there was a big party in the townhall, celebrating the death of the evil wizard. Well, one of my players got one of the females quite drunk, and...eloped. We all thought this was entertaining, and got a good laugh out of it, because she was a ghost, and that was just weird.
So later, I have the PC's protecting the crown prince, escorting him somewhere, when a warrior seemingly appears out of nowhere and cuts down the prince before they can do anything. The young man is Wraith, a half-undead abomination created from my player and the NPC from three sessions ago.
That confused everyone and constantly put everyone on edge, as Wraith could pop up at any time. Made the game much more serious,
