No, Owen hadn't been seeing Kathy, but they'd spent time together because of the panto, I think. He'd convinced himself that his attentions would be welcome, as far as I can recall. It was a horrible scene to listen to.
Very much her mother's daughter- a bit jealous and resentful. I think she enjoyed the drama of having 2 men fighting over her but the reality of poverty, returning to live with parents and taking on low pair work has given her an air of perputual envy. Spot on, Grace!