Major Spoilers for Episodes 2 and 3
The episode starts out with a pretty big bombshell that Shelley is still alive. Not only is she alive, but the Vargulf, who's neck she broke, is apparently coming back from the dead and hunting her. The scene is pretty awesome. She does a lot more than break the newly resurrected evil werewolf's neck this time.
In case you're unfamiliar with the character, Shelley Godfrey is Roman's sister who was brought back to life as an infant through some of the experiments at the company. As a result, she is deformed, tall and mute as a result. She is played by Madeleine Martin this season instead of Nicole Bolvin.
This episode has Peter making more connections with his dreams and even more killings. Even going as far as predicting who is going to die in advance. The masked killers are still making their victims look like accidents or murder/suicides, so no one else is the wiser.
Shelley later on finds refuge in a basement. She befriends a little boy, who feeds her like a pet. There's an endearing (though a little gross) moment with the boy showing his own deformity.
We also touch upon those drug dealers that Peter screwed over. The 'drugs' they gave to their boss don't do anything, so they have to get the $20,000 or you know... or else.
Also Clemetine's brother makes his way to Hemlock Grove. Clementine, who is from the Order of the Dragon, well was, as she had her chest ripped off by Olivia. The Order of the Dragon seems to be part of the Catholic church and knows about werewolves and vampires (er.. upirs).
This episode is better than the last, but still not as good as the first episode. Shelley being alive is a great thing. She was easily the best thing about the first season, even with a new actress (who seems to be doing a decent job). Apparently almost every death in the first season, didn't happen, except Clementine. She seems to be pretty dead still. The end of the episode does, to its credit, does have a pretty important moment (though a little predictable). The beginning is great, but drags a bit in the middle.