I agree with the points of your post, but Kate was blindsided by the revelation and has to deal with any aftereffects if the relationship goes south. She might not care because adults can do as they please, well, single unattached ones anyway, but she'll be caught in the middle. Kate knows Kevin's track record.
Funny how after Kate and Madison became friends that Kate didn't tell Kevin, "Hey, have I got a girl for you!" Remember how Beth warned Kevin about Zoe? Maybe Kate doesn't see Kevin and Madison as a good match. Otherwise, I see your point of "hey, we're all adults here, we'll deal." But, you know, drahma!