The most horrible scene in Shakespeare's The Merchant of Venice is Scene 1 of Act 4 which takes place in A Court of Justice in Venice. Here Shylock is preparing to collect his pound of flesh from Antonio by cutting it right out of his body. Shylock actually has a sharp knife in his hand and is making sure that the blade is as sharp as he can get it. It seems to the audience that there is no hope for Antonio because Shylock is intent on exacting his revenge. He is deaf to all entreaties, and he has the mighty law of Venice on his side. The following selection of dialogue encapsulates the situation:
Why dost thou whet they knife so earnestly?
To cut the forfeiture from that bankrupt there.
Not on thy sole, but on thy soul, harsh Jew,
Thou makest thy knife keen, but no metal can,
No, not the hangman's axe, bear half the keenness
Of thy sharp envy. Can no prayers pierce thee?
No, none that thou hast wit enough to make.
Evidently in the original play Shylock is using the sole of his shoe to whet the edge of his knife. In later versions he has been shown sharpening the blade on a whetstone and even on a grinding wheel. It is this blade-sharpening that creates the most horrible impression. The audience is expecting to see a savage operation and the stage covered with blood.
An audience today might expect a savage operation having read an editor's notes regarding the trial and execution of Dr. Lopez. Editors notes regarding date of composition allowed the makers of the fine movie SHAKESPEARE IN LOVE to present a story where Shakespeare wrote an early version of ROMEO AND JULIET in 1591. More likely, the first presentation of THE MERCHANT OF VENICE was in 1597 and the author's revision of ROMEO was popular and fresh in the minds of the audience. Therefore, some might have recalled that Romeo and Juliet each holds a dagger or knife while speaking to an authority figure(see Act 3, scene 3 and Act 4, scene 1). Therefore, the audience may have expected a great speech, which Portia provides.
Whether it's the fairy story element, the various appparent sources, or that the play was written earlier than others or something else, the text does allow many odd comments. Yes, the court scene is the most frightening in the play. To say though, that the audience is expecting to see a savage operation is allowed only by the fairy story element. Only Shylock, Antonio and Portia agree that the law of Venice allows the terms of the bond. Portia then finds that the law doesn't allow them, which is confusing. The Duke says, "Upon my power I may dismiss this court"(4.1.103 or so), which I understand to mean that by doing so he would rule the bond not valid. Bassanio's "The Jew shall have my flesh, blood, bones and all / Ere thou shalt lose for me one drop of blood"(4.1.111-112 or so) and the fact that he and Gratiano are apparently allowed to comment freely during the proceedings imply that they both understand the Duke's statement to mean just that.