My take is it means your going out to celebrate something!

Here's an interpretation: http://www.phrases.org.uk/meanings/paint-the-town-red.html

Drink to excess, in as many spots as possible. Accompanied by loud and boisterous behavior.

Well, if you're the bad guys in High Plains Drifter, it pretty much means your f*cked and you're gonna die. :):):) In the movie, the town (Lago) was painted red and "looked like Hell". And it was, in fact, renamed "Hell" by the stranger who had them paint it. The plot has some bad guys, who were released from prison, headed toward town, and the town folk knew they were pretty much f*cked, so they hired some gun slingers to kill the bad guys. Only the gun slingers got themselves all shot up by Clint Eastwood in the beginning of the movie. So the town tries to hire Clint Eastwood. (You never know his name in the movie). It turns out that the character played by Eastwood MAY have been "young Marshal Duncan"...who was whipped to death in the street while the town did nothing to help. Apparently whipped to death by the coming felons years earlier over something having to do with a deal between the town and the felons...who were set up by the town for theft. So, in the context of this movie, painting the town red was symbolic of "Hell" and the actions of the mysterious stranger were the acts of vengence (or justice) of a dead man against his killers. A classic movie...and a very good one! I highly recommend it!

If refers to going out and having a good time whilst engaging in outrageous behaviour and hooliganism. Some aristocrat in the 19th century did this and literally painted the local bar red.

Originaly it ment some blood was gonna roll. It was used when a town had to be taken out.Later it ment getting away with murder. That is what we try to do figuratively speaking when we go and party down these days.