
The Hunting Party establishes the same lesson in both the flashbacks and the island storyline: some lines aren't meant to be crossed. I give a lot of credit to Elizabeth Sarnoff for Christina M. Kim for constructing that parallel.
They threw in another theme for good measure. Jin and Sun come to a mutual understanding about how unpleasant it is to be told what to do. If there's any doubt why Kate followed the Hunting Party despite Jack's insistence that she stay behind, this should clear it up. As Sawyer said, "Hell, if [Jack] had told me to stay behind I'd have done the same damn thing."
Locke reinforces this theme in the middle of the episode by asking Jack, "Who are we to tell anyone what they can or can't do?"
Most of the flashback storyline wasn't anything too special; I think we all saw the Jack/Gabriela kiss coming from a mile away. I wasn't even all that surprised when Sarah told Jack she was leaving him. The kick in the gut was when she admitted to seeing someone else.
I reckon a lot of people have no problem with her decision, excusing it because she was neglected by Jack for so long. I don't excuse her affair at all, at least no more than I do Jack's poor judgment. The difference is Jack came home that same night and confessed, while Sarah apparently harbored a secret of ultimate betrayal for an extended period of time. Thus, this is the moment Sarah went on my sh*t list for good.
Whoops, went on a tangent there. I guess what I'm illustrating is that Sarnoff and Kim did such a terrific job with the writing that I'm completely, emotionally invested in their story!
More bonus points to Sarnoff and Kim for some great dialogue, including some moments that you'll miss if you're not paying attention. Friendly yelling "bring her out, Alex!" probably flies over most people's heads if it's their first time watching.

There are a whole host of impressive performances in this one, I'll keep it brief and to the point.
Matthew Fox: pretty standard stuff on the island, but he really sold the knockout punch after Sarah's big revelation. Couldn't help but put myself in his shoes and it wasn't pleasant.
Josh Holloway: I can't imagine this episode without him, he was the very necessary flavor and comic relief. I still laugh out loud at his delivery of, "Oh yeah, there's my favorite leaf! How could I forget this place?"
Evangeline Lilly: after her release from the Others she was brilliant. Convincingly wracked with guilt on the long trip to the beach camp.
Julie Bowen: I might have strong feelings toward Sarah but I marvel at Julie's ability to step right into a role. Also helps to know she was a big fan of the show.
M.C. Gainey: one of the most underrated actors on the series in my book. He's definitely not your run-of-the-mill bad guy, and I suspect many of Tom Friendly's mannerisms aren't anywhere near the script (such as winking at Locke when he tells him to hand over BOTH guns).

I'll start with my favorite scene in terms of visuals: the collision of the Hunting Party with the Others. I love the wide shot as all the torches come into view.
Even as the actors likely cover the same ground over and over, the choice of shots and landscapes make it feel like the Hunting Party actually covers a whole lot of ground.
Bonus points for the scene with Hurley and Charlie in the Swan. It's such a mellow, fun scene which wouldn't be plausible without the brilliant set design.

The Gabriela storyline is predictable and not all that amazing to watch repeatedly, but then I recognize it's necessary to uphold the "line you don't cross" parallel. I'd say the score breaks even on the flashback side.
The island storyline is another matter — it just doesn't get old. Does it get any better than watching Locke, Jack, and Sawyer head off on a trek to confront the Others?
THP's importance to the series is hard to argue against as well. Sarah leaving Jack would lead to its own arc in the flashbacks. The confrontation with the Others would turn Jack into Rambo — or at least prompt him to get advice from the real Rambo, Ana Lucia.

The episode hums along with your standard atmosphere, nothing too memorable in the early going. But then it all changes when the Hunting Party stops in the middle of the jungle at night. Locke and Jack's debate is cut short by Tom Friendly's, "You're exactly right, Jack."
That's the kind of moment that would make me hang up the phone on Mom (after I politely tell her I'll call her back). Mr. Friendly, you have my undivided attention.
And then — if you want to talk about a real jolt of atmosphere — Jack posits a theory that there aren't more than two or three Others among them. Friendly's response:
Light 'em uuupppPPPPPPPPP!
The first time I watched that scene I literally got chills. I'm not kidding. Visible goosebumps. If pure fear counts as emotional impact, this episode deserves all the bonus points it gets.