Yes, that dark scene with Nina with her huffing and puffing does imply that she was masturbating on some hot pics of Yuffie. My yuri sense tells me that she might attempt to....oh you know!
And yes, there's a bit of a complication now that Shirley told Lelouch that her father got killed in action due to Zero's actions. Is that kiss considered a pity kiss?!
Looks like this episode is setting up for another big event coming soon. I also heard rumors floating around that Code Geass might actually last 2 full seasons with 50 episodes total with the couple months break after season 1 ends. Supposedly season 2 will start around the same time a new Gundam series premieres.







