These lines represent the climax of the poem:
"She looked down to Camelot.
<span>Out flew the web and floated wide; </span>
<span>The mirror cracked from side to side; </span>
"The curse is come upon me," cried
<span> The Lady of Shalott."
</span>
It is the moment when everything changes in the poem. It builds up to this moment and as soon as she looks outside the mirror breaks and she ends up dying in the falling action.
Um, I would say they might be shocked because back then they didn't have anything like Rock Concerts and they didn't really like anything different, surprising, or weird. That's why when they could not understand why someone cooked different they thought it was witch craft and thought that person was a witch and burned them alive or hung them.