So after getting to chapter 5 I started realizing but not wanting to believe in that Alice had been raped by a burglar, but she had that memory blocked out by the red queen.  The red queen, a mere formal mental projection of her younger self warned her of what she had tried to block current day Alice from what had happened before.  What she wanted to forget which created the red queen.
 
In one memory Alice recalls his slimy touch and his awful bedside manner.
 
While playing DNF for my last game which had such disgust for morality, it's rare to see a game take on this subject matter and handle it so appropriately.  I'm shocked to see it has not come in reviews which makes me think that other than GBs review that other sites have not fully completed the game.  I have not completed the game and I'm on the last chapter but the story is one of the best I've seen in years.
 
I won't post again on Alice until I'm done.

@maskedarcstrike: I agree that the subject matter of this game, when it finally starts hitting you in the last couple chapters, is pretty brutal. I started to realize the direction it was going in just before the game spelled it out. I was thinking they'd just leave it all to metaphorical explanations. But they didn't. They spelled it out and damn it, that is some pretty grotesque stuff for a game.

I don't recall Alice being the one who was raped though. Was pretty sure it was Elizabeth and the Red Queen represents Alice's Hatred for (among other reasons) the one who got away with raping/killing her sister. I think the Mad Hatter and his cohorts are actually Alice's childhood made manifest (They don't care about any of this, they just want to have tea parties.). Still trying to wrap my head around Chapter 2 though and what the Carpenter represents.

I'd also have to agree that I think most reviewers never make it through this game, or don't bother hunting enough of the collectibles to fully understand the story. Not a whole lot of the story is hidden away in the end, but the slow progression of more and more little details in the memories is what eventually makes the ending so dramatic.

MAJOR SPOILERS!!!
 
@Oginam: Close, but still wrong I believe. The psychologist who is "curing" her was a friend of the Liddle family. He tried to become "close" with Alices sister with whom he fell in love in, but was eventually rejected by. Dr. Bumby raped Alices sister atleast once, maybe multiple times using the same hypnosis technique he used on Alice to change her fictional childhood hideout and friends, the Wonderland, which Alice at first repressed as her sister Elisabeth "talking" in her sleep. 
Whem Bumby noticed, that Alice wittnessed him stealing away in the night, he tried to cover his track by burning the Liddle estate. Alice survived, but the memories of seeing her family burn and her sister ravaged turned her insane. The latter memory tried to resurface in the first Alice game and finaly reveals itself in the second (the Queen = memory of her sister). After she seemingly was cured and released Dr. Bumby takes her into his "therapy" to make sure she wouldn't tell on him or atleast won't be a credible person anymore. He mangaes to get "custody" of her by convincing Radcliff the families lawyer, who only takes care of her because of his personal interest in her inheritance (which he needs to finance his love of oriental antiques), that she still has mental issues. At this point Bumby already made a buisness out of driving children into insanity and selling them as prostitutes (hence the puppet imagery), which Alice subconciously surpressed also.
What or if the Wonderland inhabitance represent, I don't quite know or atleast any interpretation would be too far fetched.

@halfcirclepunch: Ok, so there is a more direct correlation between the Red Queen and Alice's sister. I can see that. That also makes sense for the Caterpillar who is an analogue for Radcliff. Cheshire Cat is Alice's childhood cat (forgot the name) and the white rabbit is obviously Alice's rabbit doll.

Since I still haven't played the first game, although I intend to, I must be missing who/what the Hatter and Carpenter stand for. Maybe the Hatter is Alice's father? But then who is the Wonderland version of Alice's mother - the crazy lady you have to shoot pig snouts for?