Shane doesn't kill Otis. Shane wounds Otis, shooting him the leg, making it so Otis can't outrun Shane or the zombies. The zombies actually kill Otis.
And to stay on the topic of Shane and Otis...what moron walks into a school filled with zombies anyhow? I know they needed the medical supplies to help save Carl, but in that situation I'm going back to the farm and saying "Sorry, but the kid's gonna die. Why? Well, let's see you waltz into a zed-filled school and just pick up some meds."
With that said, that episode is my favorite episode. Why? It shows the Darwinian side of survival during the apocalypse. It's a great moral question: What would you do to survive? Would you injure the slow guy to increase your odds, or would you stick with him and hope that the zombies don't kill you both? One of the most thought-provoking (in my opinion) scenes in the whole series so far.