Great stuff (one of my favorite chapters in your book). The nemesis / villain is also the shadow side of the author (which most unpublished writers probably don't know or want to know, but a great writer like Billy Wilder clearly knew), and of the audience. The audience enters the darkened theater looking for integration, which means that they (as your discussion of the protagonist's need points out) have to confront and integrate themselves with the nemesis / villain / shadow.