Having just rewatched this episode, I agree with many of the sentiments written regarding this episode being a bit of a harbinger of the weaker aspects of season 2. While overall a strong one, this episode has some very weak scenes (and introduces some weak long-running plot elements) which destroy my suspension of disbelief, and as a result, this one marks the first time in this rewatch where I stop feeling like a visitor to the town of Twin Peaks and start feeling like a viewer of the TV show Twin Peaks -- which I love for all its warts and appreciate as a beautiful but flawed whole. But the immersive effect of the Pilot and those first 9 is fading rapidly.
That said, I was shocked to read in LostintheMovies's post that the Donna graveyard scene gets criticized "by seemingly everyone." I find the scene to be one of LFB's most incredible moments on the show. For me, it has a terrific mood, and defines the Laura/Donna friendship as much as anything in FWWM (that's high praise from someone who considers himself to be a Lynch fan first and a TP fan second). It runs the gamut of emotions over the course of a few minutes in a single take, and LFB kills it. I'm glad everyone who's commented on this thread seems to like it.
However, aside from that scene (and the Harold scenes, which are fine) this is where the James/Maddy/Donna stuff starts to completely derail for me. Count me in as a fan of "Just You" (Sheryl Lee's beautiful performance -- seductive, then self-recriminating, then horrified -- and Bob's single most terrifying appearance ever make that scene work for me as a unified whole), but the James/Maddy diner scene in this one is painful. The dialogue about "do[ing] it through the bars," while certainly accurate lingo to 1990-era teens, feels painfully out of place in this world. Marshall is given cliche upon angsty cliche to work with ("Sometimes I think I should just get on my bike and go"), and I blame the writers more than I blame him (although he certainly doesn't do much to elevate the material).
As StealThisCorn pointed out in the initial post in this thread, the Palmer house scene is so dedicated to shattering our suspension of disbelief that it actually works as madcap farce, although I don't know that that was the intention. (It may have been -- listen to Glatter's audio commentary for Episode 5 on the Artisan DVD, in which she delights in pointing out how stupid she finds James's dialogue about his alcoholic mom, but how she feels it works because it's so self-consciously parodic. I'm not sure that this was the writers' intention -- although Engels in particular seems to have approached much of the material with tongue firmly in cheek, based on his own comments -- but this definitely seems to have been the way Glatter approached the teenage angst material.) To be fair, Engels tried to make the comings-and-goings in the Palmer house a bit less absurd by indicating in the script that "We hear faint sound of voices off" before Donna's entrance, indicating presumably that Leland let Donna in -- I'm guessing Glatter eliminated this detail so she could get her (admittedly fun) one-shot of James's entrance, the kiss with a turnaround camera angle, and the surprise reveal of Donna when they split. James smashing the lamp is really weird though. As shot by Glatter, it appears that he actually very consciously pauses on his way chasing Donna, apparently more interested in committing some unnecessary property damage than mending fences with the woman he loves. Leland's priceless "WTF" reaction is gold. Note that the script gives James a legit Darth Vader "NOOOO" moment: "He stops, kneels in the street, puts his hands over his eyes and cries out." By the time Harry deadpans, "The door was open," you have to assume that everyone from the writers to the actors was in on the joke.
Other thoughts on random scenes:
While I'm generally opposed to the softening of TV characters over time to make them more cuddly for mass consumption, the hairpin turn in Albert's character is so odd, the speech so beautifully delivered by Ferrer, and Coop's button on the scene so damn funny (not to mention, more generally, the hilarious concept of a dedicated pacifist with severe anger management issues), I can't help but love it.
The Coop/Ben scene feels weirdly off to me. It's a thrill to see the two performers play off each other, and I wish we'd gotten more of that, but to me, the scene should be about Coop's disgust with Ben's callousness. Instead, Ben seems to come out the winner, and arguably gets away with threatening to shoot an FBI agent in barely-veiled terms (it's not clear that this is his or the writer's intention, but Coop would have been entirely justified taking it as a "dad on the porch with a shotgun" speech). Instead, Coop seems somewhat chagrined and apologizes for caring that a young girl has gone missing a week after Laura's murder! (The script spells this out even more clearly--Cooper is "biting his tongue in self-reproachment.") I understand that Cooper is (rightly) feeling a little guilty that he has complicated feelings for a high school girl, but the way Coop cedes the moral high ground to Ben with no resistance is really unsatisfying to me.
I'm really disliking the decline in Blackie's autonomy this go-round (maybe moreso because LostintheMovies did such a good job of highlighting it in his character study). While I like the dark background info that Ben apparently forced her into heroin addiction to keep her a subjugated employee, and she's getting revenge by doing the same thing to his daughter, I find Jean rubbing Nancy in her face is one knife-twist too many to poor Blackie. From a behind-the-scenes standpoint, I enjoy the offscreen evolution of Nancy (from seemingly being Audrey's buddy in the Episode 8 script -- a scene apparently shot, with Görg credited but cut in the final episode -- to a more conniving presence in a scripted Episode 9 scene where she pieces together Audrey's identity, to her final iteration as Blackie's sister that actually made it onscreen). However, nothing that the writers or the actress actually do with the character does anything for me.
The moment when Harry nearly zonks out during Coop's "golf zen" monologue is hysterical because I imagine most of Ontkean's life is now spent on Hawaiian golf courses.
Chronology is also beginning to suffer at this point in the show, with the writers seeming less attentive to the ins and outs of the "one-day-one-episode" storytelling -- a gimmick which was a huge narrative plus in the tight first season, but feels like more of an oft-ignored burden to the writers in the second season. For instance, Gerard showing up at the sheriff's station in Episode 8 then vanishing with no explanation, only to turn up again two days later; or Leland dashing out of Ben's office to tell Harry about his grandfather's summer house in Episode 9...then waiting a full day to do so. These kinds of things make sense from a serialized storytelling perspective, but really kill my suspension of disbelief and start to pull me out of the world of the show.