It's no shock that Ben was the one behind the custody battle; that was already predicted. It fits his usual methodology. What better way to force Kate out of her comfort zone than to threaten the center of her new life? Kate's default reaction is to cut and run. It's great that she was willing to face down her opposition on some level, but that felt designed to serve the needs of the plot more than the growth of the character. Kate needed to place Aaron in Sun's hands to force the inevitable confrontation between Sun and Ben.
All that said, why would Ben admit to his involvement in the suit against Kate at this particular time? All it serves is to complicate his mission even further, and toss his motivations into further doubt. Considering the fact that his timetable has been effectively halved since he met with Mrs. Hawking, he's undermining his best chances for success. There's little doubt that he will succeed in getting everyone back to the island (otherwise, the plot thread would be rather pointless), but this is getting uglier with each passing episode.
While problematic to the overall cohesion of the episode, the plot threads on the island were the actual highlight of the hour. In keeping with the format thus far, revelations abound. Daniel's theory about the effect of the time jumps and the killer nosebleeds (ala "Flashes Before Your Eyes") is sound, especially given the progression thus far. Charlotte was already known to be on the island as a child, and Juliet was there for a few years. That means, logically, that Miles was on the island longer than Juliet but much less than Charlotte. This seems to confirm speculation that Miles is the son of "Marvin Candle". Now the question is: will Daniel suffer the effects before Sawyer, Jin, and Locke? If so, that might lend credence to the theory that he is also the child of someone who once lived on the island. (And wouldn't that suddenly make Widmore's decision to assign them to this team all the more sensible?)
It was interesting to watch Sawyer and Locke confront their personal issues while revisiting a moment late in the first season. For one thing, it helps to tie it all together as one massive continuity; it's easy to forget where they all started. But even as it throws Sawyer into a mood about what he's lost, it gives Locke confirmation for all that he's gained. The Locke of the first season was equally sure of his destiny, but he had a lot less reason to believe in it.
The leap into the near future was an unexpected tease. This reveals a few things about where the story must eventually go. The scene that began "Because You Left" will require Daniel and the rest to "visit" the Dharma Initiative in the 1970s. Since Locke believes that getting back to the Orchid will be necessary to save everyone from the effects of the time travel (and to get him off the island to fulfill his destiny), that adds up.
This scene with the new interlopers from the Indian airline seems to take place after everyone returns to their "proper" time. Since it's a given that Daniel is eventually successful (since Locke does make it off the island), one might speculate that the rest of the tribe will end up in the proper time and will need to deal with this new threat at that particular juncture. (The true irony would be if the Indian airline is connected to Ben's plot, and those other people were members of the Oceanic Six! But so far, that doesn't quite track.)
The big revelation comes at the end. Not only is Jin alive, but he is saved by none other than a young (and quite fetching) Danielle Rousseau! These are two most welcome developments, and hopefully the time flashes will slow down long enough for the writers to linger over what really happened to Danielle'fs shipmates. They could spend several episodes in that time period without running out of plot elements to explore and resolve.