That's actually from 'Innocence' But I agree it's a great line :)

I like your interpretation a lot. I'd add that the Master has always seemed to me representative of a monstrous father figure (just like Maggie Walsh seems representative of a monstrous mother figure), especially when one takes into consideration his fatherly relationship with the Anointed One. And him being the…

Another bit of trivia: Spike's 'Honey, you're home' to Buffy echoes Buffy's 'Honey, I'm home' to him from way back in S2 'Halloween'.

"(11) When Buffy’s and Spike’s hands burst into flame, I see that as a reference to the opening lines of “Walk Through the Fire”: “I touch the fire and it freezes me/I look into it and it’s black./Why can’t I feel?/My skin should crack and peel./I want the fire back.” 
Joss seems to have a thing for hand-holding shots…