You can read his original proposal here,
and he adds a bit more info near the end of the post here.
In light of that, I would like to list some of the scariest books I've ever read, and provide some other suitable All Hallows' Read books. So, here we go:
Scariest books I've read:
The Shining by Stephen King - One of the scariest books I've ever read. I read it years ago, after college. I remember reading it only during the day, because I was too scared to read it at night!
Salem's Lot by Stephen King - One of the best vampire books, ever. I was so scared when I read this book that when my roommate opened the door to our dorm room I screamed and threw the book at her!
Rosemary's Baby by Ira Levin - Oh, man, this one scared me silly! However, I was only in high school when I read it, and I wonder if it stands the test of time. I'm not sure it would scare me as much, today. But, you never know! ;-)
Other good books for All Hallow's Read:
The Graveyard Book by Neil Gaiman - fabulous story! Scary enough for young readers, deep enough for adult readers. Original enough for anybody!
Dracula by Bram Stoker - Anyone who likes vampire stories should read this one, since it is the foundation for them all. However, most modern readers will not get much of a "scare" from it. The style is decidedly old fashioned, and a lot of the dialog seems very odd to the modern reader, so it's not something you can just get carried away in. But, it IS the beginning of the lore, and as such, is definitely worth a read, for historical benefit, if nothing else.
Frankenstein by Mary Shelley - If you haven't read this book because you've "seen the movie" or you think you know the story - you're wrong! Read the book! This is *not* a "scary" story involving raging monsters ravaging the countryside, villagers with pitchforks, etc. This book is an amazing exploration of what it means to be human, what it means to create something, and what (if any) obligation the creator owes to the created - or vice versa.
The Cirque du Freak series by Darren Shan - Another great choice for younger readers.
Pride and Prejudice and Zombies by Jane Austen and Seth Grahame-Smith - This (I believe) was the first of the classics/horror mashups that have become so popular. Not so much a scary story, but a delightful romp through an alternate Austen-verse, where Elizabeth and her sisters are trained zombie-killers, trying to rid England of the plague of the undead. At least 80% of the book is comprised of Austen's exact words - Grahame-Smith does a masterful job of adding in the zombie bits, and making them seem as if they belonged! A fun romp for any Austen and/or zombie fan!
If you still can't think of any good books for giving, ask anyone at your local, independent bookstore, or at your local public library!