After Bill finds a woman who is perfect for him (shudder), he introduces her and her children to the guys, and Hank thinks they're great, especially after Charlene's daughter compliments his lawn. However, Dale (correctly) points out that Hank would "cozy up to Musilini" if he said nice things about Hank's lawn. Dale has a bad feeling about Charlene's daughter Kate, and performs a DNA test on her. He is shocked to find out her paternal DNA matches Joseph's, meaning he is the father of both. Of course, unbeknownst to him, John Redcorn is the father of both Joseph and Kate.
When Charlene and Bill move in together, Dale begins plotting to break them up becuase he doesn't want an idiot raising his child, he informs John Redcorn, who agrees it's hard to watch.
One of the greatest things about this episode is Dale's ignorance, and the tiptoeing everyone must do around him becuase of it. John Redcorn's sly sympathy at the idea of a moron raising your child is one of the funnier moments, along with him and Nancy arguing over whether or not "Dale" cheated on her, while Dale obliviously protests that he should be the one to know if he cheated, not John Redcorn.
The one thing that keeps this episode from being a perfect 10 is the nagging feeling the writers of King of the Hill may be falling back on this familiar story line, and might begin to rely on it to the point of wearing a very funny concept out - two episodes in the last two seasons have centered around the Nancy-Dale-John Redcorn triangle. However, "Peggy's Heachache" and "Nancy's Boys" were in the third and fourth season respectively, and those have become two of my favorite King of the Hill episodes along with "Of Mice and Little Green Men."
*- Dale, "Blood and Sauce"