Nothing really happened in this episode of Gundam SEED. The first part was to establish Kira as some sort of prodigal pilot of mobile suits, a new type, but in this series they are man-made genetically engineered humans called coordinators.

A little bit of the back story between Kira and the Zaft pilot, and friend, Athrun Zala is revealed. The adversarial relationship between Rau Le Creuset and Mu La Flaga (Are they just making up weird sounding names or what?) is examined for the first time.

The big reveal was the phase shift armor for the Gundams. Turns them from a drab grey to the wonderful designs of the Gundam lore, specifically the blue, red and white of the hero Gundam.

Other than that, nothing happened in this episode.