With all due respect to his two perfect Dunsany pastiches ("Cats of Ulthar" and "Doom that Came to Sarnath") and to the under-rated "The Music of Erich Zann" (which we'll come to anon), "The Rats in the Walls" is Lovecraft's first truly great horror story. If HPL had suddenly chucked it all away in March 1924, or gone on to write nothing but architectural travelogues, this story would still be remembered and anthologized.
With stories this good, I don't propose to spend quite as much effort dragging out their structure and such, or summarizing previous criticism.1 I can't help, however, joyously remarking on the deft way Lovecraft turns Poe's "House of Usher" inside out with this one. We get the same conceptual play on words, as Delapore descends simultaneously into the putrid bowels of his "house" (Exham Priory) and his "house" (the De la Poer lineage). Like Usher, Delapore's line is extinct -- his son dies of his WWI injuries. We get the same excitation of the sense of hearing as the symptom, almost the literal entry-way, for the horror.2 But unusually for Poe, "Usher" is not particularly fixated on Usher's interior psychological life, whereas equally unusually for Lovecraft, "Rats" is very much concerned with the interior life of Delapore. In this story, Lovecraft proves himself able to master Poe's tools and move on -- it serves as the solid foundation for his triumphant farewell to Poe, "Charles Dexter Ward."
In my own case, reading this story also let all the light in at once about the "house as violated human body" subtext that William Hope Hodgson used in House on the Borderland. Indeed, "The Rats in the Walls" is a great, if somewhat over-loud, haunted house story as well -- the comparisons with, say, The Shining just jump out at you.
On a far more pointless note, the use of President Harding's death as a thematic sting just before Delapore's final descent may be unique in popular fiction. This is the sort of detail that just hangs there and niggles at me -- did some unknown cadet Delapore kill Harding? Was President Harding somehow protecting the world against the Rats in its Walls? Yes, yes, I know it's just a weird thematic choice. And Roswell was a weather balloon, Buzzkill Bob.
For those of you running Elizabethan horror games, I'll note that the last Baron Exham, the heroic Walter De la Poer, discovers the awful truth about his family and flees Britain during "the reign of James the First." Surely you can do something with that, perhaps tied in with John Dee's researches into the ancient Welsh language, which of course the De la Poer basements would preserve...
This is also one of the few HPL stories to have anything like a typical PC investigator party in it. There's a dilettante, a former pilot, an archaeologist, an anthropologist, a cat, and a renowned psychic (with whose weak-minded powerlessness Lovecraft has a great deal of fun). They're even "bearing powerful electric searchlights and implements of excavation." No shotguns, though. Tch tch tch.
 I would like to point out that again, Lovecraft removes, or denatures, race from his source material even as he emphasizes lineage and ethnicity. HPL borrowed the stress-atavism concept from a rather distasteful story by Irvin S. Cobb in which a Frenchman of mixed blood, run over by a train, cries out in an African dialect words used by his ancestor who had been gored by a rhinoceros. Sadly, of course, HPL named Delapore's cat in the story after his own beloved N-(word)-Man, and there are those "howling negroes" on the old family plantation (Carfax, a lovely Dracula tribute), so there you go with that. In other, happier racist-writer news, though, it's thanks to the cod-Celtic he used at the end of "Rats" that Lovecraft got a nitpicky letter from Robert E. Howard, and thus began their legendary correspondence and friendship.
 Much as we saw words as the manifestation of, and theorized them as the entry-way for, the horror in "Statement of Randolph Carter."
NEXT: "The Festival"