I have to commend Chihiro on this episode. According to their site, they re-timed that scene at least 4 times to get it just right, and they nailed it.
Even more respect goes to the actress playing Yuuko, it creeped me out more and more the further she went on and the faster she got. The similar scene with Miyako last season made me cry by the end of it, this one only filled me with dread.
There's just something about her, even with all the horrible things she's gone through, but I just can't sympathize with Yuuko. There's a huge part of her that seems to have accepted the treatment she recieves from her 'brother' and almosts seems like she wants to return it to everyone around her, especially Himura. There were glimpses of it during her confession, there is a deep, growing darkness within her. She may have said it herself, Himura left her behind, and the girl he used to know died there.
She doted on him, chased him around, tried to become his little sister, but he was still too stricken with grief about losing his other one. Does Yuuko really have the grounds to blame him? Yuuko accepted what she has now become.
Kei's life wasn't nearly as bad, but she was turning into something not unlike Yuuko. Lying, cold, becoming dirty to get what she wanted. She turned it around eventually though, and didn't drag Hirono and Miyako down into her unhappiness. She eventually found the happiness she sought, and even made peace with Chihiro.
This still doesn't explain why Yuuko has his sister's watch.