Just thought I'd throw in my two cents.
For those questioning the behavior of some of the characters, I think Walt's behavior made perfect sense. The whole theme of the episode was half measures and how he was learning the hard fact that half measures don't solve the problem. He made the mistake of taking a half measure by trying to prevent Jesse from killing the two drug dealers and as a result, a little kid died. When he heard on the television that the kid died, that's when it suddenly clicked. So he took a full measure and killed the two dealers himself; in vengeance, in anger at himself and for the sake of protecting Jesse. He is valuable to Gus and can still bargain with him to some extent, despite this.
As for Skyler, I think her turn around has been slow and not rushed at all. Lot's of life changing events have happened (most recently Hank's shootout) that have slowly changed her to be more accepting of Walt's extreme measures to provide for his family. Maybe not entirely realistic based on the average persons morals, but, hey, the writer's do what they can to make the characters dynamic and interesting.
Finally, Gus. This is the only part that still doesn't seem right to me, either. I think CCayer has a pretty good guess, though, that maybe it was all set up to give him reason to off Jesse without hurting relations with Walt (not irreparably, at least). He's just underestimated the connection between the two of them.
One last thing, in relation to the quality of this season. I have personally found this to be the best season yet. It may seem slower and more drawn out than other seasons, but it's simply much more character and dialogue driven than the past. And the dialogue is, without question, top notch this time around. Best show on TV? Yeah, I think they can continue to hold on to that crown.