What happened in this scene?

I always felt that Paul came downtown to me Marcy for a quick easy lay and it turned out to be not so easy. First Marcy isn't there when he gets to her place, she finally comes home and they go to her room (if I remember correctly) but she starts acting weird and then suggests they go to a diner where she rambles on about more weird stuff and he's checking his watch realising how late it is. They go back to her place and she's still acting weird and he realises this isn't worth it so he lashes out, partly out of exasperation or anger and partly as a way to get out of there.

I think this scene was meant to show how creeped out he was by this girl, but at the same time it shows paul's fear/paranoia, which is a recurrent theme on scorsese's films. I think this is later evidenced when he goes back to apologize her, to no avail since she has already killed herself, he notices she had a tattoo on her leg and not scars, and clearly there wasn't nothing wrong with her body, quite the contrary :)

I had the same experience. I was quite freaked out by how he suddenly became nasty and direct. I thought ‘OK this is some kind of psychological horror and we’re now meeting DarkPaul, interesting move Scorsese, I’m in’… but no, it was just a weirdly incongruous moment.

It sounds like some people correctly interpreted it as Paul pretending to be an asshole as a means to escape, combined with him becoming agitated over his potential lay turning out to be freaky burn-victim.

Either way it seems out of character. A misjudged moment in a muddled, but likeable, movie.