First of all, Happy 100th Episode PP! Secondly,
Lovecraft! Couldn't have picked a better author,
or story for your landmark. "The Music of Erich Zann" is an overlooked jewel in Lovecraft's bibliography. It seems that all the attention goes to either his Poe pastiche (still great stuff but pastiche none the less) or "Call of Cthulhu"/"Dunwich Horror"/"Shadow Out of Time". While the latter are some of his most polished and accomplished work, his less known tales are as important to Lovecraft's cosmic conception as anything better know. I am glad that PP chose something like "Erich Zann", not only because it is in itself a fantastic story, but it will give a better appreciation for HPL's work to those who are new, familiar, or experts on his work.
I'm normally one of those Lovecraft detractors mentioned in the outro, but this story was something else.
My usual problem with Lovecraft is, most of his stories, particularly in the Cthulu mythos, rely heavily on telling the reader to be frightened. Rather than describing actual horrifying events or occurrances, instead he simply says, "the thing was so horrible to look upon that I cannot begin to tell you how horrible it was and if you saw it your brain would probably explode because it's so horrible." The description of R'lyeh in "Call of Cthulhu" and that of the monster in "The Dunwich Horror" are prime examples of this technique.
Second-hand horror can be done to great effect (the first story I heard on PP, and the one that scared me probably more than anything else on the cast, is a great example), and in fact that is one of the things going on in today's story, but it requires an absolute mastery of character, something which, in my estimation, Lovecraft just plain does not have. Instead I just feel like I'm being asked to take his word for it that I am frightened.
This story made it work. Even though much of what was terrifying followed this same formula, this time it worked. The characterization of the narrator and his state of mind was very important here, as was the facility with which the mood and setting were established. This is probably the first time I've actually felt a chill while reading or listening to Lovecraft ("The Shadow Over Innsmouth" got close, but only because I was listening to it on tape while fighting murlocs 
).
Plus, it was pretty much Lovecraft or nothing for PP 100. (Poe for 200? *crosses fingers and waits another few years*)
I won't disagree with you, however, I will say that HPL doesn't have the visceral impact that the modern reader has become habituated to. Growing up on King, Koontz and Rice, as well as Carpenter and Barker, we have been dulled to the finer senses of horror that Lovecraft sometimes demands. In his day, second hand horror was often the only kind of horror that could be printed (with some notable exceptions of course). It would be like comparing the original
Psycho with
Alien.
Alien had a more sophisticated, liberal (by which I mean less socially constrained) audience permissive of a more a gory and viceral horror. Both films were scary, but
Alien was more immediate and shudder inducing.
Psycho takes a less immediate route, relying on what I call the cummulative horror. Yes,
Alien does too, but
Alien gets to the chestbursting scene fairly quickly, while Hitchcock took his time getting to the famous shower scene. Yes, you can have horror without gore (even Scott minimized it in
Alien) but it sure does help. Even HPL has his share of gore.
In short, I don't read Lovecraft because he is 'scary' like Straub or Simmons can be, but because HPL is
disturbing. HPL really gets across the meaness and unimportance of human kind and its works. No other author quite gets there (although Chambers and Blackwood come closest with "The King in Yellow"/"Repairer of Reputations" and "The Willows"/"The Windego" respectively). Lovecraft reminds me that the universe doesn't give a damn at best, and wants me dead at worst.
