There was not all that much happening in the "L.A. reality", but we learned that history teacher Dr. Ben Linus cares about his student Alex Rousseau so much that he quit blackmailing the principal, whose job he wanted (because Arzt and Locke said he'd be good at it).
Also: Ben's old dad lives. He was with Dharma and they lived on the island for a while. Interesting.

On the island Ilana makes Ben dig a grave after Miles hearing from Jacob's remains who killed the man that ever came close to a father for Ilana. She also knows she has to protect the Kwans, for they are among the last 6 candidates for Jacob's position.
Frank was supposed to fly Oceanic 815 and overslept. The island still got him, as Ben puts it.
Miles knows about Nikki, Paolo and their diamonds and gets them out.

Jack and Hurley meet Richard who takes them to the Black Rock, a place he never returned to before (sounds he came from it after all). He just wants to die after having seen his whole purpose in life going to waste when Jacob died. Jacob touched him, gave him a gift he later calls a curse. He can't kill himself. Does that mean the same goes for our candidates? Why was Richard not candidate, then?
Does Jack sit with Richard by the burning dynamite because he now is certain there is a reason for him being watched by Jacob for all his life or because he wants to die?

Smokey invites Ben to join Team UnLocke, but during the chase Linus explains himself to Ilana and we see his real feelings for once. Really powerful scene by Emerson again. Much to Ben's surprise not just Team UnLocke will have him, Ilana forgives him too. So they return to the beach where Jack, Hurley and Richard unite with them.

The episode ends with a submarine approaching the island and seeing the people on the island. Widmore, in charge, wants to proceed as planned.
He is certainly not the person Jacob was waiting for, is he?

So we have our two teams now? With only nine episodes remaining before the finale I think it's heading towards a clash.

Now, the problem with my theory from last week (the LA reality being the one where everyone gets their rewards for the choices they made on the island) is: No one's life sucks in the L.A. reality, they all come out on top. But also: no one's on the island as its protector, because it sunk. Hmmm.