For 2 and a half seasons we've seen how Don Draper was invincible. He could manipulate his way into any situation, use his charm, and deliver the goods. He proved time and again that he can not be tied down. He wanted to be his own boss, and that according to his was to not have a boss at all. Season 3 episode 7 just ripped open his bubble, when Don's secret life gets the better of him.
The Hilton account creates a furor at the office. For the employees lower in the food chain - the account meant loads of money for Sterling Cooper. For the upper management, this meant a deadlock situation. Connie Hilton offers business because he wants Don. But Don can't take the account as he has to sign a 3-year contract. And for top guys this is too good an account to let go. Don's war secret comes to haunt him again, when Bert Cooper blackmails his using that to get him to sign the contract. For Don, the whole episode was a journey of self realization for him. Right from the time Sally's teacher reads him correctly to the time he is taken for a ride by a teenage couple. Peggy deals with her share of failure. She reevaluates her relationship with Duck, after Don humiliates her. Somehow, the whole hot exchange of words seemed right for Peggy. It provides her an opportunity to realize she is not Don Draper. And the very reason she has an office of her own, is not because she's good, but they needed a copy righter who wears a skirt.
Peggy flirts with the possibility of cheating on Don. She finds her advances turned down by Henry Francis, and she is unable to use her sexuality to bring down a reservoir project. This episode has made god strides in representing the fallout of characters. It's about time we see a change in power structure.