Hmm, I didn't read the whole thread but ... if the level of horror marking is applied like damage maybe you could make a copy of Horror Mark that does negative damage?
edit: Found a way to cure horror mark...
Get a unit horror marked 65536 times...
So if horror mark has some kind of damage setting that to 65535 would remove one level of horror marking...
2nd edit: how about chaining spells?
Will chaining horror mark to itself cause an infinite loop and can that be broken (if no more valid targets are on the field for example?)