No, no, no...the whole point of the scene was ironic foreshadowing. Both Judy and Lana went on to look "evil" in the eyes and watch it stare back, and while Judy was broken, Lana just got tougher - becoming more like Judy in the process by the time she got to old age. The lighting effect when Judy says that line about evil was just that, lighting.
Why the hell would the devil start off as the most powerful player in Briarcliff, then jump to some unimportant farmboy, then to Sister Mary Eunice?
It's just foreshadowing. "You have no idea what I'm capable of". When you see Miss Lana Banana for the first time, you wouldn't think that she has it in her to survive any of waht she had to go through, and yet she did.