As the fate of Nadine is left dubious, the next scene centers on Hank Jennings (really bad guy) and Josie Packard (widowed owner of Packard Mill), who is much more than she seems: dealing with Ben Horne in a double cross of her sister-in-law Catherine, and now paying off Hank for killing her beloved husband in the first place. Josie seemed sweet and innocent in the beginning of the season, but is clearly not to be trusted.
If Laura Palmer is the murder mystery center of gravity in the story, the Packard Mill story is the soap opera equivalent. All of the major players in that storyline (Ben Horne, Josie Packard, Catherine Martell) conduct themselves with an air of treachery, deceit, lust, greed, envy, pride, and general corruption that would put the best-rated soap operas to shame. Pete Martell is more or less caught in the crossfire of their dealings, although he has a soft spot for Josie, and tends to help her when he can.
Speaking of which, Catherine and Pete share their first non-bickering exchange in the next scene. Catherine knows that she has been set up, since she found out about the life insurance policy that was taken out on her by Ben and Josie. She's trying to find her fake ledger and breaks down in front of Pete, asking for his help. This is the first time that Catherine seems like she may have a heart after all, but she isn't used to it (as seen on her face when Pete embraces her).
Cooper and Truman interview Jacques Renault in the hospital next, discovering that he was passed out when Leo, Laura and Ronette left the cabin, so he didn't witness them being killed. The murder took place in a train car, after all (not the cabin). Although it's completely obvious by this point that Leo was the killer, remember that in Twin Peaks nothing is quite what it seems. For example, Dr. Jacoby is also in the hospital at this point, having survived his attack (but remembering nothing useful).
After a few minutes of conversation-driven scenes, the action picks back up to a boiling point, when Leo Johnson gets shot (again), the Packard Mill is set on fire, Jacques Renault is murdered, Audrey Horne discovers that her father owns One Eyed Jack's (and is planning on trying out "the new girl", being her) and just when you thought that you had seen enough, in the final seconds of the season Agent Cooper gets shot. Roll credits.
David Lynch and Mark Frost crafted this episode as leverage so that they could be guaranteed a renewal for the second season. All shows do this, but normally not with such audacity, which is all part of the charm. The second season starts out with a bang and tells a compelling series of stories. Season 3 will almost certainly be unique, and I hope to see it capture the magic that makes this now 25 year old show still so memorable.
Bottom Line: The season ends with a series of bangs, containing memorable performances from the entire cast and resolving certain cliffhangers while introducing much more suspense in new developments.
Recommendation: If this is the only episode you see, you'd probably never watch the show again, but if you have been following the series to this point, you are in for a serious ride.
Kevin Mooseles knows (but won't tell yet) who killed Laura Palmer. He enjoys a damn fine cup of coffee, and has been craving doughnuts every day since he started watching Twin Peaks.