Something in the Water question

From what I remember, Erin watched on the news as Holli's photo was shown and she was believed to be implicated in another attack/terrorist attack perhaps??? And they mentioned when Holli said in her interview how she's going to do great things when she's released. And Erie feels stupid for not realizing that's what she meant - something bad.

I was confused about that as well. I didn't see the significance.

The entire Holli character and (minimal) story line should have been left out, it was entirely pointless