Wow, man, just got caught up on this thread and I loved Fright's spoiler write-up. Last night I was at restaurant talking to one of my friends about the film and three other couples ended up joining us and everyone took a different take on how the story played out.
Spoiler...
Personally, I thought that it was the mother (and eventually her son) learning to live and deal with her schizophrenia. I got the sense that she suffered some sort of mental breakdown as a result of her husband's death and was having "episodes" each night which created the psychological effect of her son personifying her episodes as a "boogeyman" type entity. You'll notice in the beginning and middle of the movie that her son is wary of her in the morning, I took that to mean that he wasn't sure what mother he was getting.. his loving mother or the Babadook. I can't remember the exact scene (I already want to give it a re-watch) but there was a scene where the mother is alone watching TV.. her head snaps to the side and her voice is guttural, exactly the same voice that croaks "Baaabaaadoook" from behind the kid's door. Later, in the same scene as she (in her episode) is trying to get to kid's door she falters and drags her foot behind her making a stuttering, rumbling sound before she knocks on her son's door. Three times.
Also, while the boy vehemently believes in the Babadook.. you don't ever get a sense that he "sees" the Babadook. Naturally he fears the dark and he fears the boogeyman.. but during the rare scene where the Babadook makes an appearance I never got the sense that he was actually witnessing the entity itself. Whereas the mother seems fully aware and is able to "see" the entity stalking her. Then there's that scene where she is chasing after him and he has a very specific attack planned out in advance.. he wasn't warding off the Babadook.. he was protecting himself from his mother and clearly this was not their first time in that scenario given the fact that he had a well executed plan of attack in each room. Also, the end was interesting for me.. you see the mom form kind of a protective understanding bond with the darkness, the Babadook.. I took the final scene as a very oddly beautiful scene. The mother is happy, she has made peace with her demons.. but having known schizophrenics in my own personal life.. without medication.. they continue to have these episodes. Not as full blown as whatever got them the original diagnosis.. but it's almost like an LSD flashback.. they'll have a trigger that causes them to act out or have an "episode". So I took the mom going into the basement as her having her "alone" time, her moment to act out, you'll see that she locks the basement door behind her.. why would she lock herself in a room with a monster? .. and the fact that her son gave her a bowl full of worms.. well.. if you told your kid that there was a monster in your basement that needed feeding.. what do you think he would feed it? Creepies and crawlies.
I'll probably come back to this thread after I've watched it a second time. I want to pay to see it though, this is actually the first movie in a long time that I want to go support after having d/l'd it. I really liked the effectiveness of this movie.. just the fact that I was able to get into a deep and meaningful conversation with complete strangers in a restaurant about a movie is something special.. it was made even better by the fact that each of us (a total of 8 people) had completely different interpretations of the story.. and honestly I could see the merit in each of them.. except for the guy that theorized that the kid was the Babadook, that was just fucking stupid.