My Interpretation.....SP OILER ALERT
At the beginning of the film we see the abused son escaping the basement chamber and running through the woods being chased by Monster Mommy. At this time we see Peter's parents die in a firey car crash. I think the mother killed her son by tossing him over the falls, however made it appear that it was Peter by leaving the shoe. Mother then keeps Peter locked in the same basement chamber for many years as her replacement son. I gathered that Peter and his family were travelling and the hotel was their last stop before the crash. This explains peter's entry in the hotel guest book, the family photo, and why he chooses to go back to the hotel to stay. I think the woman at the hotel is the same lady in the photograph, which is the ghost of his dead mother. When he's talking to "Peter" in the woods and he says something to the effect of, I know what happened to you. He is aware of the abuse the son was subjected to by the hands of his mother, which ultimately led to his escape and death. Peter had the same experience so he was "walking in dead man's shoes" and the two boy's experience cross over each other. At the end we see the red hoodied reflection of Peter in the camera so we know he is the killer. To sum it up. The son died made to look like the missing boy. The missing boy, Peter was holed up in the basement by the mother, Peter went crazy and killed a few people. As for Sara, she had sympathy for Peter because of everything he had endured.
Hey, did you ever try dunking a potato chip in champagne? It's real crazy!