This is the best episode of the season so far! My only complaints, which I'll get out of the way right away, are that the pace is a tad too slow until the end and that, even though she puts a lot of effort into gaining everyone's trust, Gwen Post's true motives still don't come as much of a surprise. Giles should have contacted the Watcher's Council for confirmation. Aside from these relatively small complaints, though, this is top-notch entertainment. We get a ton of character development, interesting dialog, and great special effects.
Putting aside Giles' lack of insight in calling the Watcher's Council, I like Gwen Post's character and her influence on everyone, especially Giles and Faith. Giles feels a bit threatened by her, mainly because she's implying he's gotten too close to his Slayer. This is something that will come up again in Helpless (3x12).
Faith says you can't trust guys, which echos her feelings in Beauty and the Beasts (3x04). In large part due to Gwen's betrayal of her later in the episode, Faith decides that now she can't trust anyone. This turns out to be incredibly important to her development. Gwen is the first piece that begins to put Faith on the dark path. She doesn't trust anyone fully anymore saying "I'm on my side, and that's enough." Buffy correctly responds, "not always," but Faith doesn't give in.
The other big event happening here involves Xander and his reaction to seeing Angel back and kissing Buffy again. This is obviously very surprising to him and his reaction is suitably worried. This leads to the fantastic 'intervention' scene with Buffy and the gang which is very well acted. I was excited to see Buffy bringing up Xander's jealousy problem as a motivating factor for his behavior. Xander is harsh, but not completely wrong, when he reminds Buffy that she didn't stop Angel from murdering Jenny Calendar in time.
The 'intervention' scene directly spills into the powerful scene where Giles explains to Buffy that she has no respect for the job he performs because she didn't come to him about Angel immediately. Giles is completely correct here, and Buffy genuinely learns from her mistake. In the future we see Buffy telling Giles her secrets a whole lot sooner and trusting that he will help her through her difficulties instead of judging her.
Gwen Post spends a ton of time in getting not only the Scoobies, but especially Faith, to trust her. This leads to Faith jumping to conclusions when Xander spills the beans on Angel's return. Faith wants to kill Angel and it makes complete sense that Xander wants in on the opportunity. This is even more evidence that Xander lied to Buffy in Becoming Pt. 2 (2x22) because he didn't want Angel resouled. To Xander's credit, though, he knew Angel didn't hurt Giles and 'attempted' to talk Faith out of rushing out blindly based on wrong assumptions to kill Angel.
I really appreciated the dialog between Buffy and Willow on secrets. Buffy admits that keeping her secret was extremely uncomfortable and didn't make what her and Angel were doing any sexier. She also reveals that she feels much better now that it's out in the open.
The special effects for the glove were fantastic. I don't love this show because of the action and effects, but when I see something that was really well done, I feel the need to point it out. The ending fight and Gwen's death scene were also incredibly exciting to watch. So all in all, this is a near perfect episode which manages to put the characters' motivations for the rest of the season in motion.