I was pretty hard on this show after the first few episodes, but I have re-thought my position. Just as Louis C.K.'s stand-up has always been off the beaten path, so has his brainchild, "Lucky Louie." That being said, I still feel that some of the earlier episodes could have been better. This episode, however, is in my opinion the finest work of this show yet.
From the first fight with Lucy, all the way to the end of the show, the viewers quickly realize Louie is right. The kid is, indeed, a "f**ing a**hole." The thing I found curious is that Kim seems entirely resistant to discipline of any kind. Even though Louie is ineffectual, at least he tries, going as far as asking Walter and Ellen(their neighbors) for some advice. Walter suggests timeouts, but his reaction to Louie's later question, "You put your kid in a closet? I can't help you," is priceless.
One of the things that I have come to appreciate about this show is that things are usually not tied up neatly at the end of each show. This is very realistic, because most of our life problems last longer than a couple of days. All in all, a very entertaining episode.