Now this is more like it. At this stage in the BBC's history, they really do view television as a sort of strange variant on the stage play, and so they're playing to their strengths when they treat 'Doctor Who' like a stage play as well. "The Wall of Lies" opens with the resolution of Barbara's rescue, but this is really just the mechanism to get to the far more important and effective conflict between the TARDIS crew and the locals. Barbara knows Tegana is up to no good, even if she didn't see him with the men who tried to kill her. Tegana knows that he's in a precarious position; there's no direct evidence implicating him, but Barbara can definitely finger him as being up to no good.
And what follows is a wonderful riff on "Shakespeare's Greatest Hits". Tegana outmaneuvers the TARDIS crew using the most effective political tactic of them all--come out swinging and immediately accuse the other party of the exact thing you're doing. He warns Polo that the Doctor and his friends are trying to set the two of them against one another by lying, in a scene reminiscent of Iago's performance in 'Othello'. When Barbara does tell Marco that she followed Tegana to the cave, she doesn't realize she's playing right into his hands.
We then follow up with a platonic twist on 'Romeo and Juliet', as Marco decides to limit Susan's influence on Ping-Cho without realizing that the Doctor distrusts Ping-Cho just as much as Marco distrusts Susan. The two friends are caught in the middle, with a wonderfully effective sequence displaying the difficult position Marco is in. Even if Tegana is lying, it's not like Marco can simply kick his butt to the curb; Tegana is an emissary of peace from a foreign power conducting delicate negotiations. This is the kind of person Marco can't antagonize, not without definitive proof of wrongdoing. His anger at Ping-Cho is almost like a father getting upset with his daughter for doing something dangerous without even realizing it.
And it all leads up to a wonderfully effective sequence as Marco discovers the grain of truth that makes Tegana's lies so effective. For all that the Doctor is right about Tegana, Tegana is also right about the Doctor in one key area. He doesn't trust Marco, he doesn't respect Marco's authority, and he is working behind Marco's back to defy his edict and steal what Marco has claimed as his property. The fact that Marco essentially stole said property, which the Doctor views as justification for his actions, only hardens Marco's heart against him; in order to reconcile the cognitive dissonance of stealing the TARDIS while still viewing himself as a moral man, Marco needs to see the Doctor as deserving of his fate. The Doctor's actions give Marco the excuse he needs to justify his harsh actions. The scene in front of the TARDIS, where Ian is forced to bluff things out until it all collapses (to Tegana's quiet delight) and the Doctor threatens to scuttle the TARDIS rather than let it fall into Marco's hands, is a brilliant and insightful sequence that changes the whole nature of the story.
And then, just when you think that the paradigm for the story's second act has settled, we get the excellent cliff-hanger. Ian prepares to subdue the guard and escape, only to find him already dead. The more this story focuses on its characters, the better it gets. This episode is a huge improvement off of last episode's stall, as Lucarotti figures out that the best thing about the series at this point is its characters.