1. People will argue by saying "oh the whole prison part made Dan feel more powerful since Laurie was with him." That's bullshit, the tenement fire made Dan feel more impowered when he was with Laurie.
You're right, the prison scenes aren't about Dan and Laurie. It's about Rorschach, or maybe about Dan and Rorschach, since it shows that Dan still feels an obligation to help Rorschach.
2. As interesting as Dr. Malcom was, what was the point of him? He connects nowhere after that chapter except visiting Bernie at the newsstand for a whole panel. People will also argue by saying "it was to explain Rorschach's backstory!"
What was the point of Bernie and Bernard? Joey and Aline? Gallagher and Bourquin? Seymour and the New Frontiersman? These characters serve as foils for the prevalent worldviews and main themes of the plot. It isn't all about the characters, you know. Watchmen is primarily driven forward by a conflict of philosophies.
If you wanted to explore
Rorschach's backstory, make a chapter for him! If you could make an entire chapter for Dr. Manhattan, I don't see why you couldn't do one for Rorschach.
Everything that needed to be said about Rorschach was said in the prison scenes and throughout the novel. Anything more would have been superfluous.
3. What happens in the prison that connects anywhere in the rest of the book? Was Big Figure nessecery? Oh we saw Walter throw the hot fat on the prison mate to show how screwed up he was, don't even get me started on that point.
The hot fat on the prisoner - which wasn't him being crazy, but rather him defending himself - was necessary because when the prisoner died from the burns, it sparked the prison riot. Big Figure was there to show how screwed up Rorschach was - or, at least, how much of a grudge he holds and how unforgiving he is when it comes to punishment. It was also a nice little bit of dark humor - some of the best comedic wit of the graphic novel.
4. On chapter 12 when Walter takes his mask off to Dr. Manhattan, we should've been surprised on what Walter looks like. Before chapter 12, they should've showed us just 1 panel every now and then of how Walter became Rorschach, show back shots of his body or something so that we wouldn'tve seen his face. Then finally when we see Walter's face, it shows us a couple'a backstory panels, some talking between Walter & Dr. Manhattan, some more backstory, and on and on, but not too much.
No. The death scene is perfect as is. Short and sweet. But I'll explain: Rorschach taking off his mask isn't about his face. It's set up by Rorschach's capture, which you clearly didn't understand if you thought that Rorschach taking off his mask at the end was about surprising you with how he looks. Instead, we've been shown in the Rorschach imprisonment scenes that he considers his mask a part of himself - he considers it his real "face." Taking it off implies - at least to a degree - that he is shedding the identity of Rorschach in that moment before his death, allowing himself to die as Walter Kovacs (although there are many interpretations of why he did it that are widely varying and all interesting).
Hope that helps.