The pale horse could represent imagery of trickery and treachery leading to death. In the Woodsman's incantation (episode 8), "This is the water, and this is the well. Drink full and descend" could represent the well of deep, universal knowledge. To "drink full" is to descend from the surface world of appearances into the knowledge of darkness underneath. "The horse is the white of the eye and dark within" could represent intimate treachery, as in "Don't fire until you see the whites of their eyes," meaning don't attack until you are close. "And dark within" could be a reference to the Trojan Horse, again an instance of trickery. Saying that "The horse is the white of the eye AND dark within" seems to suggest that all humans are vulnerable yet capable of darkness.
Historically, a white horse represents the archetype of the hero (the knight on the white horse who saves the maiden). Special agent Dale Cooper is the quintessential knight on the white horse as he tries to save Laura Palmer from being murdered. But even he must confront the fact that he is "dark within." Given this context, it is interesting that the white horse appears just before a death (or murder). Is Lynch saying that we should not place complete trust in our heros?