Even the decade's color schemes seem kind of ominous
Absolutely. I disagree when people describe it as "kitsch" because that seems more appropriate for the halloweeny colours of the 1960s.
The organic colours of the seventies - beige, brown, orange, olive-green and mustard-yellow - kind of makes it look like a living thing, especially when the cinematography goes for the humid look.
A few years ago I watched BLACK CHRISTMAS (1974) based on many good reviews. I found it disappointing but perhaps I had the wrong expectations.
What I did like were the perfectly chocolate-y colours, I could almost taste the Christmas.
A few months ago I watched ALL THAT JAZZ, and again it wasn't for me, but there was something about the way they used the colour black that gave it both a sophisticated and suffocating atmosphere.
I believe the seventies was also the decade in which the desire to look for "alternatives" had seeped into the mainstream. It's not so difficult to link that with the individualism that kinda challenged the family unit cornerstone - which Ang Lee captured so perfectly in THE ICE STORM (1997).
The first age of information that may have been intended to enlighten its audience, but often resulted in feelings of loss, uncertainty and dissatisfaction.
It was the perfect time to be conned into a cult, but this time it was the housewives instead of the rock star groupies.
From a bizarre point of view I could see the story of THE EXORCIST as a symptom of that individualism.
As a result, there was this sense of melancholy hanging over the seventies decade, and since horror always works better with a tragic undertone (like the very first murder in HALLOWEEN, and as DallasFanForever pointed out very Manson-esque) it was almost in the DNA of the seventies horror films.
The optimism (albeit delusional) of the eighties decade removed a lot of that genuinely depressing atmosphere in horror, and since that was the age of new special effects technology they focused on that anyway (and I must say that I really liked it at that time).
In addition, the seventies saw the creative peak of New Hollywood, which - as unfathomable as it may seem today - was also allowed to peak. I'm not sure how that relates to European cinema so I'd rather not speculate about that, but personally I don't think it's a stretch.
Anyway, I think that's why we got these horror movies going the extra mile and being more than just the right shot in the right moment.
I'm not saying that it was all great, and neither was the British film industry. I'm not a big fan of the kitsch and hysterical Hammer horror films.
The seventies is also remembered for its unsavoury "disco" sleaze and while that's not entirely untrue I think it works better in the films from the 1960s.