When I say 'out of character' I don't mean the episode is out of charcter. Personally, I think that its pretty hard for Roswell to have a plot-line or story that is out of character because its a show open to so much.
However, I felt that Liz in particular seemed out of character in this episode. It felt like personality wise, and even to a degree her dress-sense, had done a 180 from the last season. She started acting out against her parents, breaking rules much more radically than she ever had done before and simply in general seemed much more agressive than she had done in the first two seasons. Perhaps all of this is as a result of of Alex's death, and its a way for her to adjust, I'm not sure, I just didn't feel like it worked out.
To a lesser degree, like I said before, her dress-sense changed quite a bit since last season. I'm only mentioning this because I feel that dress-sense is often representative of the character. Going with her new personality Liz is wearing sexier clothes and more make-up. I did enjoy the episode overall though, especially the flashbacks to how Liz and Max got together again- I loved their date at the wharf, up until Max's drowning scene that is. That scene also confused me with 'new' Liz- in that scene she's still the Liz I'd come to love in the first two seasons, yet in the present day she seemed completely different. As to whether or not I like the 'new' Liz, I'm not sure yet. Will have to watch more of the season before I can make up my mind.