***It is best said that "Batman: Terror" is the sequel to "Batman: Prey"; so if you haven't read the latter, discontinue reading this review (there will be spoilers).***
Taken from the comic line "Legends of the Dark Knight", "Batman: Terror" is a well-developed, cohesive, and all-around great TPB. Following the events of "Prey" - in which Professor Hugo Strange developed an obsession with Batman that led to his supposed death - Prof. Strange returns, Hell-bent on revenge and he's enlisted the aide of one of the most insidious members of Batman's rogues gallery: Jonathan Crane, aka The Scarecrow. However - in his "tunnel-vision"-like obession with beating Batman - Strange has left himself woefully unprepared for Scarecrow's bloody insurrection. With Strange out of the way, Scarecrow goes about his own plans, involving the exacting of revenge against all his childhood bullies who helped shape him into the monster he is today. However, he too is obsessed with the one bully who still tormented him following his initial transformation into the Scarecrow: Batman; and he has a plan for getting the Caped Crusader that involves the sultry sneak-thief Catwoman.
"Terror" is a classic story of revenge, demon-facing, and learning of trust (as exampled by the trio of Batman, Cptn. Gordon, and Catwoman) told through the masterful writing of Doug Moench ("Batman Four of a Kind" - 'Batman' #19) and brought vividly to life by Paul Gulacy ("Batman: War Games, Act Two - Tides") and Jimmy Palmiotti ("Batman: Two-Face/Scarecrow Year One"). One way that this story most obviously stands apart from its predecessor - and even rises above it - is the greatly expanded role of Catwoman; who between her pseudo-sexual games of cat-and-mouse and love/hate relationship with Batman, becomes a necessary asset to the story as opposed to well-illustrated eye-candy thrown into the mix for no greater purpose than that. In her own issues with Scarecrow (being subjected to fear gas, being unmasked and photographed), remains the strong independent female who just might let herself fall for Batman, were it not for his astounding self-control and sense of duty.
Chromologically, this story and its predecessor seem to fall into the "year one" space on the timeline, occurring between "Batman and the Monster Men" and "Batman and the Mad Monk" (even though Cptn. Gordon does make a single brief reference to Two-Face (indicating that Harvey Dent now exists as a villain), but this is easy to overlook and shouldn't throw the rest of the story off too badly).
I cannot recommend this book enough, but absolutely buy it with "Batman: Prey"; you'll be glad you did.