Grimmer Fairy Tales

So for oh, a century or so, genre writers have been trying to "rehabilitate" fairies and put the scary back in them. The fact that Guillermo del Toro has still got to talk about that on director's commentaries for films like Hellboy II and Don't Be Afraid of the Dark suggests Machen and Blackwood, et al. just didn't get through to the masses. So I'm not going to convince you fairies can or should be scary, I'm going to suggest some different campaigns you can use them in if they are.

Unseelie Apocalypse
Malign fairies associated with death stalk the world and humanity is in danger of extinction. I've pitched the Faerie Apocalypse before, but that version was more analogous to the alien invasion plot or perhaps something like Planet of the Apes. This is the Faerie Apocalypse as more akin to zombie apocalypse films. It's more Walking Dead than Falling Skies, which mostly comes down to tone and some small details. Get read of the shining courts and anyway to negotiate with the Folk and play up their relentless murderousness. Fairies have a connection with the dead--take a look at the slaugh--so they're already something like zombies.

Rock City is scary, but probably not scary enough

Goblin Market
Roadside Picnic isn't genre horror, but it has some horrific elements to it. What if, instead of aliens, the Visitation had been fairies. What if there were zones of fairies? Neil Gaiman's Stardust sort of depicts a Fairy Zone, as does the urban fantasy series Borderland. (Both of those were borders rather than circumscribed zones, true, but close enough!) Neither of them are particularly horrific, though. But if you played up the alien weirdness of the Fae Zones (think Wackyland except terrifying lethal and just plan hostile to human life), you can probably get there. This would play pretty close to the "dungeon as horror" thing except all the creatures would be of the Fae.