Kaysen is shown to be a villain who liked to play around with his victims, such as Diane at the art gallery being a prime example or how he handled things with George. He seems to like the idea of people trusting him and getting off to building that trust then betraying it, and putting people in helpless situations. There's evidence through the game Kaysen has done this hundreds of times through the United States and travels from place to place to check up on the people he's screwing with and how they're doing. I'm under the impression Kaysen doesn't even specifically need the tree from Emily, Greenvale has plenty of red trees, he just saw an opportunity for him to have some fun and spread for suffering, while also being able to get more trees out of it. I think of Kaysen a bit as an embodiment of a Gluttony sin, he eats and does sexual things but never has his fill (he even says this in the game), so he wants to get as much as he can out of a single person before disposing of them.
Now this isn't explicitly said in Deadly Premonition, but in Swery's game before Deadly Premonition, "Spy Fiction" for the PS2, there's this scientist named Forrest Kaysen:
There was this purple gas stuff in Spy Fiction very briefly, ultimately what I think the implication is (but this is very broad) is a military organization was doing some experimenting with a purple gas which turned everyone in the town violent and seeped into the ground, purging up when it's raining. I feel more answers may possibly be given in the sequel as a prequel/sequel, but I'm taking it that the purple gas seeping into the ground and red trees being grown here and special are connected. The red tree seeds give an otherworld power to George, and of course we see the purple gas and the red trees all over in the otherworld. I have some theories deeper than this, but honestly I don't think there's any concrete answers for now why the Otherworld exist. We just know the Military 50 years ago with Forrest Kaysen's influence let a purple gas over Greenvale that made people violent, the gas seeped into the ground and it comes forth when it's raining, the gas and the Red Trees are connected, and the Otherworld is related to the Gas and the Red Tree.
I think the actual reason Emily doesn't see George go out is just an oversight, but I can offer one potential excuse. Whenever you're in the Otherworld time freezes (or rather, goes crazy) and it's definitely implied it's not on our plain of existence. I'm kinda' under the impression you only begin to be aware of when the Otherworld hits if you get too exposed to it. York begins the game going outside in the rain, which as we learn the locals don't due to superstition. Emily is cooking and doesn't go outside ever in the rain whenever it does as we know from her questline. George obviously was going outside in the rain as we some others. I think when the world "transitions" the real world clock pauses and those who are in too deep begin to see the Otherworld. There's a few cases people disappear when the Otherworld happens, but I think the likes of Emily and such begin to get more exposure to it as the game goes on. There's even a plot point about the difference between mild and overt purple gas exposure when it comes out of the ground when it's raining.
So this answer is a bit me trying to put some stuff together and not official, but I think how it might work is that people only see the Otherworld when they've taken in a certain amount of Purple Gas and gotten closer to the Red Trees. Like when the Hospital goes to the Otherworld I don't think most there see it, I think only York, George and maybe Thomas enter it then. Emily gets more exposure to the rain outside the museum when Diane is killed and right before she meets the entities she is close to Kaysen and his Red Tree, plus the seeds from the case, so maybe she just finally has been exposed enough to it she becomes susceptible.
Of course, there's a flaw with this theory. There's not a clear definition of what leads some people to go mad, and what leads other people to just be in the Otherworld. York, Emily, Thomas and George all seem to enter the Otherworld as themselves, but then we see the Towns people towards the end turn murderous. Now if you stay too long there, York also has a unique death scene where he turns murderous, but it's not really clearly defined what determines if you enter the Otherworld or not. My only guess is it's something to do with a combination of purple gas+red seed exposure based on who goes there within the game and when they do.
I think to everyone else not in the Otherworld though, time is kinda' stopped which is how George could've entered without Emily noticing once the Otherworld kicked into gear.
