The climax of the Onidamashi-hen Arc comes to a bloody close while also cementing Higurashi: When They Cry – GOU as a unique beast all its own. To quickly recap, Keiichi has grown increasingly wary of Rena over the last few days after finding out information about her past from Detective Ooishi. It's important to note that while Ooishi is your typical gumshoe type, his poking around the school group to find out what became of photographer Tomitake and Miyo Takano is what spurs Keiichi's paranoia about his friends. Pair that with his faint memories of past loops (aka the original Higurashi timelines) and the poor boy is a MESS.
At the center of this episode is framing and how Keiichi and in turn, the viewer, could be misinterpreting what's going on in Hinamizawa. We aren't usually asked to give the potential murderer the benefit of the doubt, but that's exactly what Rika asks Keiichi to do when opens up and tells her about his concerns regarding Rena. Rika essentially asks him to question whether everything is really as sinister as he thinks and this prompts Keiichi to take another point of view.
Unfortunately, it's all for naught. Keiichi's parents go out of town to Tokyo and ask Rena to bring him dinner. Keiichi still hesitates at the door as he's conflicted by what he feels he saw (Rena spying on him) and his inexplicit memories of murdering Rena (a previous loop). He finally lets her in and attempts to apologize to her but Rena has her heart set on a blood-soaked murder leading to a very intense scene of Rena stabbing Keiichi in the gut while he tries to beat her off of him with an alarm clock. In the madness, Rena drops some clues.She believes she's been cursed by Oyashiro-sama ever since she left Hinamizawa. She alludes to her mental break at her previous school. She thinks once she murders Keiichi, she'll be "demoned away" like the previous years' victims following the Cotton-Drifting Festival. She references her father getting to live in the village in peace as a motivator for the crimes.
Based on the ending sequence, it seems safe to assume that Rena's dad is an alcoholic. Anything else about him isn't textual to GOU yet. Surprisingly, Rena's attack to the gut wasn't enough to do Keiichi in. He's brought to the hospital and it's later stated that Rena is dead, suggesting he effectively beat her to death with the clock. I say hospital, but it's possible that he's at the Irie Clinic, it's not really explained either way. I assume it's the clinic because he's also visited by Mion while he's there. Rika and Satoko were also found dead with the same kitchen knife Rena used, but in their own home. The police believe it to be a murder suicide.
Additional stray observations: We get our first look at the Irie Clinic before Keiichi's attack, and it's closed down for remodeling, according some very suspicious dudes in track suits that are unloading a lot of boxes from unmarked vans.HERE MARKS THE HIGURASHI SPOILER LINE. STOP HERE IF YOU'RE NEW TO THE FRANCHISE
This episode was primarily new content and it's starting to seem like GOU is introducing alternate endings to the original arcs. The flashback Keiichi is tormented by where he beats Rena to death with a bat is the original ending of the "Demoned Away" arc. The introduction of the neck itching tic also originates there although its importance is originally heightened by the discovery of Tomitake's body showing he clawed his own throat out. Meanwhile, Miyo's presence is the arc is lessened.
Originally Keiichi stayed home from school to avoid the entire friend group, as Ooishi planted doubts by connecting all the previous festival victims to Keiichi's friend group. Keiichi grows increasingly paranoid until we end up with the baseball scene as shown in flashbacks in GOU. Another key difference is that we know Rika is aware of the looping and even the truth behind what's happening in Hinamizawa. This difference is key to episode four because it's the underlying motivation for Rika's heart-to-heart with Keiichi outside of school. She's attempting to stymie his paranoia since she knows where it will lead him.
As for the Satoko-Rika murder-suicide, my thought is that it's likely Rika went to Keiichi's house to see if he went on his murder spree, found he and Rena, called an ambulance, took the knife, and went back and murdered Satoko and then herself to move on to the next loop.
The next arc is titled "Cotton Deceiving", and is likely a companion to the original second arc, "Cotton Drifting/Watanagashi." Mion fans, rejoice!