Mike definitely took a 'half measure' with not killing Lydia. But dude really is old now and has nothing to really live for expect his family (granddaughter), why not shack up with Walt and Co. and try to leave her something now that the DEA took all he had saved for her over the years?
Walt really is becoming a cocky little prick and I love it. The smirk on his face through the window when Mike called him was great and he gives no dambs that Skyler is a wreck really.. he's just saying things but not really feeling what she's going through. I was pretty convinced when Mike said that none of the other 11 people would snitch. Though there is loose ends and you never know who might do what with this show, the fact that Jesse and Walt got paid upfront in money has their name nowhere near the bank accounts that the DEA seized, so they're clear on that end and none of the 11 (other than Mike) know who the cooks were.
The ricin is definitely going to come back into play, they have been hinting at it since Season 2 and it has not been used yet.. it's gonna play a huge part as we draw closer to the end. I can't even begin to guess how or when it will be used, but I'm sure it will or they wouldn't of kept hinting at it each season.
Walt is really in another stratosphere right now, he's feeling like the king of the world. I loved Mike's line for the next episode "Just because you killed Jesse James, does not make you Jesse James." He's really in over his head, from a dude who was pretty much scared of his shadow and in his eyes a failure at life on the verge of death, to not fearing anyone or anything - it's a huge leap and the way it has been done has been satisfying to watch. His ego/choices will get the best of him, no doubt.
Lastly, a Mike centered episode - finally! I wanted more of him since we first met him and the first episode mainly for him not only delivered but was one of the best of the whole series. This Lydia character has me very interested, I wonder what more she will bring to the table (other than the methylamine). Mike should of definitely killed her, but I think he felt a soft spot for her because she also had a kid and he seems to really hold his granddaughter at high regard. Maybe Mike's just losing the step he once had and is becoming soft.. but I saw it as him wanting to rebuild the foundation he built for his GD through Walt and Jesse's partnership.
Can't wait for next week.