Interpretation and Allusions
The storyline is similar to Ambrose Bierce's story "An Occurrence at Owl Creek Bridge", in which a prisoner is hanged, while imagining escaping and traveling home.
Philosopher Slavoj Žižek interprets the film's bipartite structure as exploiting "the opposition of two horrors: the phantasmatic horror of the nightmarish noir universe of perverse sex, betrayal, and murder, and the (perhaps much more unsettling) despair of our drab, alienated daily life of impotence and distrust".
Read more about this topic: Lost Highway (film)