This is what I thought as well - that either the mom was going to forget the kid in a hot car or something, or that while Lydia and the principal were getting it on, one of the mom's current or former boyfriends killed the kid in a drunken NYE rage. Or, less dramatically, for Lydia herself to realize she is being "tempted by sin" (either before or after they have sex). While I agree that the writers were probably attempting to show how Lydia is learning that being tempted by sin leads to bad outcomes and those that tempt her should be punished, I don't think the execution worked. It ended up coming across as much more of a woman scorned type of picture.
It felt incomplete as a 'backstory' story - which is okay if there is more to come, but not okay if that's all they are going to give us.
I also wondered what became of all of those people in Gilead - I'd imagine Noelle becoming a handmaid, and the child being 'adopted' out, but I am unsure about the principal, who seemed genuinely put off by removing the child from his mother, and if we will ever see these characters again.
As for the rest of the episode - I also thought the execution of the final scene was lacking something to give it the emotional impact that the writers were going for. It was hard to see why exactly Ofmatthew flipped on Janine, and what lead to her complete breakdown. I read the interview with the actress but I don't think a lot of that was shown onscreen very well. It looked to me like June was telling Ofmatthew to shoot her. June's pleasure at the chain of events was also off-putting, to say the least. I really just don't like or care about her anymore.
I want more Emily - and not the ridiculousness of threatening to extradite her to Gilead.