Kathy pulls up to a swanky house. Oh snap. It's R.F.'s house, and Kathy's one of the dancers from the Coconut Grove hired for the floorshow. Why do we fear this isn't going to end well for our new pal Kathy?
We see a quick succession of scenes from the party. Men scramble to light Lina's cigarette only to have her toss it into the air. There's plenty of dancing, including some sweet moves from Zelda and Olga. Cosmo flirts.
Finally, Don shows up. He seems preoccupied and pulls Cosmo aside. He wants to know if he's a good actor.
Cosmo reassures Don that, yes, he's a good actor. Don says he's shaken up a bit. Suddenly, he's flanked by R.F. and Lina. R.F.'s been holding the show for him.
R.F. gets everybody's attention. First, he commends Don and Lina, then he reveals a movie screen and asks everybody to sit.
He wants to show them something funny: It's a demonstration of a talking picture. A talking picture? That's not a thing.
R.F. plays a short clip of a man demonstrating a talking picture. "Note how my lips and the sound issuing from them are synchronized together in perfect unison," the man on screen says. Okay, so maybe it is a thing.
The partygoers think it's fake and that there's somebody talking behind the screen. Everybody—including R.F. and Dexter—dismisses it as just a toy. We're sure that won't come back to bite them in the collective butt later in the movie.
R.F. says he has another surprise, and a giant cake is wheeled out. Who pops out of it? Why, it's Kathy. She and Don lock eyes. Yup, we knew this wasn't going to end well for her.
"Well, if it isn't Ethel Barrymore," Don says, twinkly-eyed and triumphant. Kathy doesn't speak, but her facial expression says, "Oh, I am so busted."
As Kathy works the room, handing out streamers and vamping it up with the other Coconut Grove dancers, Don hounds her and gives her a hard time.
He also tells her she's cute. Somebody clearly feels he has the upper hand again. Also, with all of the teasing, these two might as well be in 8th grade.
Kathy and the other Coconut Grove dancers, all decked out in what look like pink bathing suits and matching bathing caps, launch into a song and dance number called "All I Do is Dream of You." It's a catchy, candy-coated distillation of the '20s.
This song previously appeared over the opening credits of 1934's Sadie McKee, a melodrama starring Joan Crawford as a working girl who endures three rotten relationships on her way to happiness. Sounds like a real feel-good film to us (source).
The number ends with the Coconut Grove dancers shimmying backwards out the room, and our man Don chases right after them.
And Lina chases right after Don, demanding to know who the heck Kathy is.
Don mocks Kathy by saying yep, she sure is a big-shot, legitimate actress. Kathy gets riled up and throws a cake at Don's face—only he ducks and Kathy hits Lina instead. Lina takes a facefull of frosting about as well as you'd expect. Kathy wisely vamooses.
Don chases after Kathy again, right into the Coconut Grove dancers' dressing room. Donald Lockwood, you dog.
Another dancer tells Don that Kathy grabbed her stuff and bolted. She tries to flirt with him, but he runs after Kathy just in time to see her driving away from R.F.'s luxurious pad.
Don's bummed, but then he starts grinning. Somebody's smitten.