He apparently has a background with Timmy, as he appears to have hated him straight from his debut episode. Yet, Cosmo does not seem to know him.
In "Go Young, West Man!, it seems that Horace Shallowgrave has a type of hook that only brings back kids dead rather than alive (which costs extra.) Principal Waxelplax found some extra money in the budget to pay for it.
Shallowgrave was completely absent from the show from Season 5 before appearing again in Season 9, one of the longest times between appearances for a character on the show.