Have been playing Medusa for a while now, which apparently means it's time to essay! On... basically what I think Medusa thinks about everything. Because sometimes it's tricky to figure out! And clearly the solution to this is to write a thousand words or so about it.
Proceeding chronologically-ish!
800 years ago
I wish I had more canon on this. What we know: 800 years ago, Medusa betrayed Arachne and somehow helped her near-death at the hands of Shinigami-sama. Also they have a third sister.
My pet theory, based on the fact that Eruka says Medusa can't transform into a snake (and we never see her do so) is that Medusa lost her transformation powers somehow in one of Arachne's experiments, willingly or otherwise. That's completely conjecture, though.
Working at Shibusen
...I wish we had more canon on this too. Soul Protect supposedly camouflages a witch soul as the soul of a "normal human" - so, presumably not a meister or a weapon? So Shibusen hired someone with no apparent powers? But then she supposedly "goes out to investigate" when Eruka and Mizune show up in Death City, and not only should a "normal human" probably not be able to sense witches, it would be an incredibly bad idea to go investigate them. So maybe she claimed to be a meister? Who... mysteriously wasn't educated at Shibusen, and has no weapon. Though she can fight hand to hand, and theoretically she might be able to wield a weapon? Kim does, after all...
We also don't know how long she's been working there. And somehow in some unspecified manner after some unspecified time Stein manages to figure her out.
SOB CANON SOB.
If I had to pick arbitrary headcanon for the above, it would probably be something like... she claimed to be a meister without much power who was born outside of the normal families, or whatever, and didn't notice until adulthood, and got hired mostly as a nurse. Most people can't tell the difference by the feel of her soul under Soul Protect, but for someone like Stein who can see souls, her soul appears... suspiciously featureless, or something. Honestly though I expect to cope with this issue by avoiding the subject.
However, we do have canon that she hated working there. She can act according to Shinigami-sama's goofy lighthearted atmosphere, but she doesn't enjoy it at all.
On the students
Medusa definitely observes the Shibusen students as much as she can, just because she'll take any opportunity to learn things and mess with people. Particularly Maka and Soul, presumably for reasons of their ~potential~. Really, though, the whole thing with Soul and Maka and the black blood was mostly just a convenient experiment that didn't really have a whole lot of impact on her wider plans.
Medusa has approximately zero direct canon interaction with the other students, which makes it, um, fun trying to figure out how they would interact. I'm more or less working off the assumption that she's not specifically interested in them - not that that would stop her from testing or experimenting with them if the opportunity came up, but that's sort of her default view of people.
Kid is sort of a special case because he's a shinigami, but I don't... really know what that means? Yay canon. So default view again, only with more caution because of his relationship with his father.
On Chrona
Chrona falls mostly into the category of "convenient experiment", too. ...Except that I don't see how having a child is particularly convenient. But if Medusa's goal was freeing the kishin, Chrona was, at most, an experiment to see if the black blood was ready and a way to test and hold off opposition from Shibusen. Other than that, Medusa will use Chrona where it's convenient but has no particular attachment.
...Honestly Medusa's treatment of Chrona is by far the most uncomfortable part of her character for me.
Between the different-world thing and the fact that Ragnarok is gone - Medusa isn't terribly interested in Chrona in camp. She'll make her spy if it's convenient, but it's camp, not Shibusen; there are easier ways to get information most of the time.
On freeing the kishin
Medusa's reasoning as she explains it to Stein is that Shinigami-sama is trying to keep the world's status quo, and that the kishin is a power beyond normal human levels that will be a catylist for the world to evolve. This is... actually one of the only things Medusa says aloud that I'm taking as pretty much completely true. Watch, she'll turn out to have some other motivation in later canon just to screw me over entirely. >_>
But, as far as I'm concerned: it has partly to do with witch-born desire for destruction; partly to do with a scientist's desire to see what will happen; partly to do with a desire for new things after as long as she's lived. She'll also explain it (to people in camp who seem like they'd take the angle well) as a crusade against an organization (Shinigami-sama + Shibusen) with a tyrannic grip on the world. :)b
On Stein
...*deep breath*
Okay, so, first of all, even though he's a sadistic scientist, Shibusen's strongest meister, etc., I... don't actually think Medusa would have been particularly interested in Stein if he hadn't approached her and opposed her. Even during the ceremony, if Stein hadn't pulled her out to dance, if he hadn't been suspicious enough to send Sid to her lab, if Sid hadn't shown up right then... Stein would probably have been locked in the Independent Cube with everyone else, and her plans would have gone off completely smoothly without his involvement either way.
But! Stein is her only real opposition, as far as her plans to free the kishin go. Shinigami-sama was completely oblivious, apparently. So he makes himself very interesting, and she does like him for that, and likes not having to be fake around him. And she does tell him the truth about her plans while they're dancing - which I think is a reasonable basis for assuming she's telling the truth while they're fighting, too. And she asks him to join her.
And then their fight. So many great things during their fight. So many things I wish I had a 100% accurate translation of. ;;
Stein is outmatched, but even so Medusa is pretty impressed by him once he's when he deliberately lets himself slide into hyper-focused sadism ("like he used to be") - although we note that Stein still manages to plan reasonably well, if recklessly.
Stein explains his childhood, and his decision to restrain himself and follow rules passed down to him by an almighty god. And then Medusa pretty much offers to be his god. And Stein's objection is more or less "you don't rule the world yet, so why should I listen to what you say as right." Which. Tells me that if Stein did join Medusa, it... wouldn't exactly be a working partnership.
But Stein does manage to win, more or less. When Medusa can still move after being cut in half, she bites him just to piss him off and make him "destroy" her rather than keeping her soul. And saying "I love you"... Well. I'd say she says it about 90% for the same reason, but it's also kind of true - she likes him more than anyone else, at least, and it is impressive to her that he managed to, in an instant, ignore the likelihood of himself dying in order to take advantage of her moment of weakness and cut her in half.
(It occurs to me that an essay on the themes of Soul Eater would do well to include a comparison of Maka's "I just imagined the worst possible thing!" to Stein's "I can't imagine that I would die.")
-- AND THEN WE GET INTO STUFF PAST WHERE I'M PULLING MEDUSA FROM IN CANON. BUT IT'S STILL RELEVANT, SO. --
On hallucination!Medusa
So far, there is not any evidence that Medusa is responsible for or even aware of Stein's hallucinations of her. I... actually like to read it that she's not. That is, that Stein's hallucinations are constructed solely by his own head, and the arguments that hallucination!Medusa makes are actually things Stein argues with himself about, although they are extensions of things she said in person.
It's also interesting to note that he stops hallucinating her when he goes really crazy. :D
On driving Stein insane
This part always causes difficulties for me, because I don't like seeing Stein like he is after Brew. :-/ It's not at all like the hyper-focused release-of-inhibitions that she gets from him in their fight, or the... surprisingly reasoned opposition to power that hallucination-Medusa asks him for. Instead, he's unaware of what's going on around him, self-destructive, and pretty much incapacitated.
So my working theory here is that Medusa has given up on convincing him to join her willingly (she does actually say during her fight "it's useless to keep asking") and, having discovered that he's her biggest threat (near-death will do that), is instead just working to take him out of the picture. Which she does quite effectively with the battle for Brew, and just in time for her to "turn herself in" and continue the next phase of her plan.
WHICH IS. KIND OF OPPOSITE TO HOW I'M PLAYING HER IN CAMP. But camp is a different circumstance - she's still working on plans, and Stein's not a threat right now.
On working with Shibusen against Arachnophobia
Speaking of the next phase of her plan: I HAVE NO IDEA WHAT IS GOING ON HERE. I am pretty damn certain that everything Medusa said to Maka about rescuing Chrona is completely false. But that does not actually tell me much about her motivations or plans. Not to mention that whole thing about nature being polluted by magic and crying and. What, canon? Give me something here, seriously. I can make things up, but I like to have a little bit more to work from.
On the anime
It is now diverging from the manga, and HAHA WHAT. Apparently Medusa gets to kidnap Stein soon, or something? I'll probably keep watching it just to see what they do, but. Yeah.
...Man, somehow this essay makes it sound like I ship less than I do.