Cortez expedition fails. Spectacularly, as in the Aztecs make a point about letting the sacrifice of the Spaniards and a good number of their Tlaxcalan allies very public and very sacred and very choreographic. However, a small number of Spaniards makes it back to Cuba with having witnessed that.
This does not sound terribly likely for the Aztecs to let happen, but let's say a couple of Spaniards manage to sneak through.
However, the Aztec Empire has been ravaged by war and epidemics and the Spanish know it is there, now it is filthy rich, and know it inhabited by awfully barbaric heathens who Must. Be. Annihilated.
The next expedition is better prepared, better armed, more numerous and motivated by sacred rage and vengeance as much as sacred gold hunger. A crusade, only really worse than the actual ones.
The Spaniards don't even try to make good Christian out of the Mexicans any more so they really did with the Moors back in Iberia.
They obviously cannot KILL everyone, but all the natives they take are mercilessly enslaved. Charles V does not know whether he's more pissed at the cruelty of his conquistadores or the Aztecs' one. The Church's objections voiced by the Las Casas sort of guys are silenced, ignored, or impatiently sent back home.
The killing and enslaving spree in Mexico set the precedent for the rest.
Spanish brutality obviously triggers large and brutal native revolts that are mercilessly suppressed. Increasing numbers of African slaves are brought in to compensate the devastated slave native population. Some of them are freed and used as a militia to reinforce tiny Spanish numbers.
Racial feeling cristallyzes that the American natives aren't exactly human, or if, they are inferior and evil anyway. Some theological loophole is devised to legitimize this view with Scriptural reference, though the Church back in Europe still does not really buy into it. The system goes adrift with time solidifying with time in monstrous oppression. In peripheral areas, man hunts, massacres and outright sadism go on unchecked as deviant personalities from Spain are given freehand.
Basically the Free State of Congo, entrenched on a continental scale, for a couple of centuries.
Is this gruesome enough?
EDIT: I don't see this as very likely scenario. Spanish Conquistadores did monstrous things, but they usually weren't monsters just for the heck of it (well, some of them were). However, I think it is not ASB.