The camera's view moves over the figure's head and it looks very much like Angel, who is jerked from sleep in a cold sweat.
After he leaves, Angel goes to the police station to talk to Kate and notices the crime scene photos, which call up haunting images of his dreams.
After Penn escapes, Angel searches for him and ends up at Kate's apartment, where she reveals she now knows about vampires and particularly his past.
Angel, Cordelia, and Wesley use his previous visits to find Penn's lair in an oft-remodeled hotel/apartment building.
Afterward on a rooftop, Cordelia tells Angel she had a vision, but he is worried about his nature, because he enjoyed the dreams of hunting and killing.
[1] The script was originally called "The Killer I Created", until a detailed summary appeared online, prompting Minear to alter the title.
"I went on to the Buffy message board... changed the title and said it was about dreams and about horrible things that you do in your sleep, which completely fooled the fans," says Minear.
Another pivotal scene, which was conceived early in the breaking stage, is when Kate goes through Angel to stake Penn.
Because it's Angel opening himself up and actually sort of taking responsibility in a visceral movie kind of way for this horrible thing that he's done.