We learn that Ted used to be a vigilante, and that he worked with a partner, Isaac Stanzler. When Isaac killed a drug dealer six years ago, Ted ended everything and told him to get out of the city. It's not clear why Isaac has chosen now to come take revenge on Ted, but he's certainly committed to destroying Ted's life by framing him for the murders. There's a lot of painfully obvious parallels between Ted's story of falling out with Isaac and what's happening with Oliver and Roy in "Guilty". It's not subtle, and it does push Oliver to realize that what Roy really needs is his support, but it comes across as very heavy-handed.
Particularly out of character is Diggle's call for Oliver to just cut Roy loose. Diggle is well aware of how the Mirakuru works, and Team Arrow cured huge numbers of conscripts dosed by Brother Blood in season 2. The Arrow team doesn't seem to be keeping close tabs on all of them, so what makes Roy more dangerous than they are? Roy didn't ask to be dosed with the Mirakuru, and forcibly removing him from the team would just separate him from any hope of healing. This is a really hard line to take, and Diggle isn't usually our hard line guy. For a character that is being set up as the opposite of Amanda Waller, and is likely to have an ideological (if not physical) conflict with A.R.G.U.S. centering on his wife Lila, this whole argument is completely out of character. It feels like the writers are trying clumsily to establish a schism between Oliver and Diggle over Roy, but why not just have Diggle demand that Oliver ground Roy until they can be certain that he won't have any further Mirakuru outbursts?
Oliver helps Roy with his nightmares by using meditation, a technique he learned while in Hong Kong. Through Oliver's flashbacks, we learn that Maseo Yamashiro's wife, Tatsu, helped Oliver use meditation to access his memories. Oliver uses the same techniques to help Roy connect with his memories consciously instead of through nightmares. Roy realizes that his memory of killing Sara was actually a memory of killing a police officer while overdosing on Mirakuru. Oliver and Sara had witnessed it, but because Roy didn't remember it, they didn't tell him. Roy, who spent most of season two struggling with his anger and disappointing Thea by severely injuring people, is understandably upset over the realization. He may not have killed Sara, but he is still responsible for someone's death, even if it was due to the Mirakuru.
Despite a lot of stilted dialogue in "Guilty", Ted manages to get some pretty good lines, particularly during his pissing contests with Oliver. Oliver is angry that Ted is teaching Laurel to fight, and in response Ted says, "Did you bother asking what she wants?" It's nice to finally have someone call Oliver out on his unwillingness to consider what Laurel wants and needs. As much as he says he doesn't want to treat her like something fragile and in need of protection, he certainly doesn't spend a lot of time asking her what she needs in order to feel safe. Oliver finally acknowledges that he was wrong to push Laurel away when she asked him to train her, and that's a good sign that we're likely to see Sara take on the guise of Black Canary soon. That, and the promo image released this week by The CW of actor Katie Cassidy as Black Canary. She certainly looks the part.
The episode ends by introducing us to Cupid, a new villain in the form of an obsessed fan turned vigilante. Cupid attacks Isaac Stanzler as he is being escorted by police. If you watch carefully, you can see her stalking Arrow throughout the episode.
Bottom Line: "Guilty" suffers from poor characterization, the likes of which we haven't seen since the beginning of the first season. It's great to see more of Ted Grant and Roy Harper, but the painful dialogue and mixed motivations coming from Oliver and Diggle make this episode hard to love for any but the most dedicated fans.
Recommendation: If it wasn't for J. R. Ramirez's glorious lines as Ted Grant, I'd say skip this one.