Why did Shane shoot Otis?

Answer 1

Shane's sanity is beginning to slip by Season 2, episode 3, "Save the Last One." The title, as a good title should, gives a glimpse into what is happening in the minds of the characters.

Consider for a moment that there are only two children left in the group, and Sophia is missing.

At the end of the episode, Shane and Otis are losing ground to the pursuing herd of Walkers. They've expended nearly all of their ammo, left only with their pistols. It is implied that Shane has only a couple rounds remaining, and in desperation shoots Otis in the leg. Not killing Otis, Shane makes Otis a distraction for the herd, who is attracted to his cries of pain and terror. Shane escapes, ostensibly saving the last child.

The obvious message here is that desperation makes people do desperate things, and in this case at least, chips away at what keeps people civilized.