First question--does the Pottersville sequence accurately depict George Bailey's world, minus George Bailey?

Certainly not.

So what's the point of it then? It gets clearer if we look at the film in its' context as a modernist work, instead of as smiley-faced shock-therapy... Now, generally modernist solipsism festers in the scum pools of memory and imagination, or affects a glow of originary impact. The Pottersville Sequence is unique--a murky flight from experience set ablaze by its' own contradictions. An illustrative comparison can be drawn between Geroge Bailey and Thurber's Walter Mitty, a superficially similar character. Both men are trapped in the gerbil-wheel of the Protestant Ethic and yearn for release. However, where Mitty projects a daydream wonderland onto his drab surroundings, Bailey abstracts himself from reality and casts himself in a neon-lit film noir cliche. He drifts through Pottersville as an enigmatic stranger, clashing with the shades of characters he has known and helped, ravening for just one look of recognition.

Contrary to the criticial consensus, George Bailey is not an "everyman" but a god--an immanent one. The fabric of Bedford Falls is held together by his divine presence. "Pottersville" is the negative image of an impossibility--a creator lost in a creation that could not exist without him.The sequence is a classic of American existentialist expression--an inversion of Emersonianism, or rather, the product of an Emersonianism that has lost faith in itself (sort of like Hart Crane did--right Aaron?). The whole world remains compartmentalized in a corner of the subject's mind--only now it's a dark corner.

It's often argued that Capra merely rewrote Dickens' A Christmas Carol for a more democratic age, making the clerk a hero and the miser a fixed referent; but there's very little logic in this comparison. The protagonists face fundamentally different problems. The agents of Scrooge's "conversion" come unbidden to force him back into society. Bailey, on the other hand, feels crushed by the weight of his relationships, and prays for some reassurance that his sacrifice has not been in vain. Scrooge's ghosts show him that a joyful world awaits just beyond the confines of his isolation chamber. Clarence confirms that George's reality, wothout George, would be a nightmare.

Compare the X-Mas present stave of the Carol to Pottersville--they differ drastically, although they purport to represent the same thing: "reality" untainted by the subjective presence of the protagonist. Clarence tells George: "Each man's life touches so many other lives. And when he's not around, he leaves an awful hole." Meanwhile, in a key scene, Fred explains to his guests that "the consequence of [Scrooge] taking a dislike to us, and not making merry with us, is, as I think, that he loses some pleasant moments, which could do him no harm. I am sure he loses pleasanter companions than he could find in his own thoughts." There is so much less at stake for Scrooge's world. It has a substantiality that Bedford Falls lacks. Even the Cratchit household, despite its' poverty and Tiny Tim's illness, functions autonomously, with enough agency left over to fuel a gratuitous toast to the old miser. These objects pull Scrooge into their orbit. George Bailey, on the other hand, is a sun on the verge of supernova...