Well she did "Break his heart". I feel like Leo runs on emotion instead of logic 90% of the time. He is always angry. He probably thought he was pretty smart for killing 2 birds ( Not literally) with one stone/tiny firebomb.
I think in the pilot we are made to think that the killer is the one digging up the heart necklace. Then we see Jacoby with it and that puts him high on the suspect list, but they have made him so buffoonish by this point he has dropped off significantly, and getting attacked by a black clad figure really drops him down the list. It makes him seem less dangerous and we are also given another mysterious figure to accuse. We are also let in on the tape audio that we were cut off from earlier in the season which points to the "mystery man". The fact that it was withheld from the audience and that the reveal didn't point at Jacoby really clears up most of the audience suspicion. But, he is still on the suspect list, everyone is on the list.
A few other fun comments on this episode. Pete does know who has the ledger, which I never though about before. Hank's overtures toward Jose seem to have sexual subtext but blood thing is almost a tv safe version of rape and it probably accomplishes the same basic point which is violent forceful dominance, the horns on his head are awesome. Its great to see the guy pulling the strings is just hanging out and working the pay phone at the Double R, Though he must be spending a long time taking out the garbage because he manages to threaten jose and kill Leo while on his shift at work. There are some great transitions in this episode, the fire in the mill cuts to someone pulling a fire alarm at the hospital, Pete at the burning mill cuts to Ben signing the contracts. I love that Bobby is smart enough to try and pull the "O shit, I mean good thing i found you" line. Cathryn seems to be trying to decide if it is in her interest to cut Shelly out before doing so. More secret passages, the little hunched seamstress goes into.