Things to focus on in a model lesson
Having done this, I'd advise:


Take it really seriously. In places where candidates are judged equally on teaching and research, the model lesson could really make the difference. Strong researchers may neglect it, relying on their publication/citation record.
Make sure you prepare for the expected audience (in my case, 1st year students), not the actual audience (academics).
Feel free to use techniques you would use in a classroom, but then use "time jumps" to indicate that the activity has taken place. The problem with this is that if you have follow up questions, there may be no answers and the lecture may fall flat.
Don't forget "learning objectives" and "lecture structure" up front, and other guidelines for students throughout (though you probably can only show one such thing).
Practice more than you would practice for an actual lecture.
No corny jokes. If you cannot tell whether a joke is corny, then assume it is. In fact, beware of jokes. Relying on natural humour is probably better.