As someone who likes the back stories, this was a good episode. We learned why Kate had the airplane, who she "killed"...and yet we still don't know what her initial crime was. I think that left it nice and interesting for the future.
I concur on the final two scenes...but this was more filler than it was plot, and it was, indeed, a Kate episode. So, shock of shocks, it ended on Kate. I think this was a good move for the character...it gave us a glimpse of her life and what she left behind. The Walt scene was much more interesting, you're right, but there is three whole hours to get into that. It's very interesting that it was his sensing of the hatch that changed his mind, but in the end it was one of the more insulated Episodes. As one of those however, I think it was quite well done.