I agree.Probably not, but I think things might have been a bit different if he could have saved her father. Helping her father change his ways to do better by his daughter would have been nice to see.
I don't think they should have been a couple though but I do think she'd have been a great addition to Angel's Team.
I don't see the character not freaking out anyway, regardless of when she found out.
Kate would have been a great coke head prostitute, sad they didn't go down that road.