I think that episode makes us, the viewers, uncomfortable because we value our minds so much, and the idea that someone can basically mess with it is creepy as hell. At least to ME.
A traumatic memory is a traumatic memory is a traumatic memory. Doesn't matter if it's real or not. It's real to the person it's been inflicted upon and it hurt/scared/angered them. It's always seemed to me that memories tied to emotions leave the deepest marks on us, so to be filled with memories of pain and misery, real or not, would mess anybody up.