In Version 2, I would try...
- TWISTED all on the one line
- Keeping the reversed 'S', it's great
- Make '-TED' non-reversed.
- Keep the lovely white/red contrast, or make only the reversed 's' red. (Try both, see what works.)
- Shrink that tagline a wee bitty, and consider moving it below the title. It can go above the title if you want, though -- it's a personal choice, do you want viewers to read the title or the tagline first?
Version 2's a really strong improvement, but you need to remember that a key purpose for book covers is readability. Even in thumbnail size, the title should be readable. You can get away with a reversed 'S' because that character reads clearly even reversed, but you want the title to be easily read by passing viewers.
(Note, also, that reversing the entire second half of the world makes 'TWISTED' turn into 'TWI?LED', which I think it why a few folks here are struggling to puzzle out what the second word is.)
Reversing the entire second half of the word doesn't help with readability. Positioning the text diagonally doesn't help with readability. I'd avoid making viewers work harder than they need to.
A part of me actually prefers the diagonal layout of the first image: it's artsy, it's interesting, it makes the most of a somewhat bland background image. It would look ace with more minimal font formatting: strip all that beveling and embossing, pick a nice clear block font, and make it slightly opaque so the image is still suggested behind it.
But diagonal fonts are a rare sight on trade published books, and I can't help but think the horizontal layout in V2 is more readable/more commercial. V1 is quirky and artistic but it doesn't feel as clean and polished.
Dang, this is tough. These are some really excellent concepts, it's hard to pick a favourite!