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After that surprise, the story jumps back to the day before. SG-1 is visiting Galar, a planet they have recently contacted. The Galarans have only recently begun exploring through the stargate, but they have some very interesting technology. SG-1 is beginning the process of working out trade agreements.
A secret Galaran project (shared with SG-1) is that of memory replacement. From the study of a Goa'uld memory device, they have figured out how to insert memories from one person into another person. The utility of this is that useful memories, such as those of training a pilot, could be transferred from an expert into a novice, thereby speeding up the novice's training. Mitchell receives a first-hand demonstration of the device when an innocuous memory is implanted in his brain; the Galaran technology then leads him through reliving the "memory" and he testifies that it feels completely real. (I notice that none of the more experienced SG-1 members volunteered to have their minds messed with.)
Earth and the SGC are very interested in the technology and urge SG-1 to keep up negotiations. The more experienced members of SG-1 do express some concern about the possible abuse of such powerful technology. Relations seem to be progressing well until a cocktail party on Galar. At the party, the lead scientist, Reya Varrick, learns that the military is going to begin exerting more control over the project, which infuriates her. Mitchell, who is obviously attracted to Reya, tries to soothe her and ends up going back to her place. They begin to become more intimate than is probably wise - and then we jump to Mitchell awakening with blood on his hands. He has apparently murdered Reya in her home and is quickly taken into custody. Mitchell confesses, because he remembers committing the murder.
Fortunately, SG-1 is not stupid. When the others visit Mitchell in his cell, they quickly point out that they don't believe he did it, and his memory of the event could have been implanted. Mitchell knows this, but it doesn't stop the fact that he keeps running through the memory of beating Reya to death. The other members of SG-1 vow to get to the bottom of things.
The Emmissary of Galar (apparently an ambassador or some type of government official) works out a deal to return Mitchell to Earth without prosecution, even though the evidence (his confession, fingerprints at the scene, a sky-high blood alcohol level) is against him. The Emissary wants to keep cordial relations with Earth. Mitchell refuses, however, because he wants to clear is name. Both General Landry and the Emissary give him and SG-1 approval to pursue the case.
The first act SG-1 takes is to ask the remaining memory project scientists to try to determine if Mitchell's memory of the murder is genuine or implanted. Surprisingly, they find allies in the scientists: the scientists believe that Reya was murdered by someone in the military because she opposed increased military control. However, after running through Mitchell's murder memory numerous times, they can find no evidence that it is implanted.
As a last resort, the scientists ask Mitchell to relive a similarly horrible event to the murder so they can compare his responses. They finally detect evidence that the memory was implanted. With more effort, they figure out that the real murderer is Dr. Marell, one of the scientists. He is Reya's estranged husband. He had apparently drugged Mitchell, killed Reya, faked Mitchell's memories, and then used the memory device to replace his memory of the murder so that he would look and act innocent of the crime.
The remaining scientists then remove Mitchell's fake memory of that evening, leaving behind his real memories. (However, he still has all memory of the rest of the incident and the attempt to frame him.) The Emissary decides Dr. Marell is too valuable to the project to be punished, and so orders Marell's memories to be replaced so that he knows someone murdered Reya, but not that it was him. SG-1 returns to Earth; it's unclear if their negotiations with Galar will continue.
This episode had a number of good and bad points.
Later on, when Mitchell must relive a memory similar to that of the murder, we see him flying a fighter plane over a desert. He is awaiting clearance to drop a bomb on a convoy. He gets the go-ahead and releases the bomb, but seconds later he is told to abort. Of course, it's too late - the bomb does destroy the convoy, but the convoy was filled with refugees. Mitchell is not accused of any wrongdoing, but nearly resigns from the Air Force from guilt. I can't imagine being in his place then.
These two scenes (plus an additional one between Mitchell and his father) go a long way to showing us how Mitchell has become such a strong person even though he is so young. These events, plus his horrible accident in the fight over Antarctica against Anubis, have really put him through the wringer. Now he's got this additional awful experience: even though the immediate false memory of the murder was removed, he went over that scene so many times that he must have etched it into other parts of his memories. How much of a consolation is it to know you aren't guilty when you feel like you are?
This ending also highlights the many abuses the memory technology has had when it is still in its infancy: used to frame Mitchell, and then used to "fix" a situation. Clearly the Galarans need some kind of moral and legal framework to guide them in the use of the technology. And who's to say that Earth would use it any better?