It started so peacefully: while the Downton toffs waited for Sybil to produce someone who can take over the house in series twelve, elsewhere there was light scandal, moderate sexiness and amusing subterfuge, in what was often the funniest episode of the series so far.

Thomas, who remembered he was gay last week after six years of asexually fighting in wars and opening bad shops, got straight on with wooing Jimmy James the hot footman. It was the old "winding the clock" trick: standing behind him, one hand on the shoulder, the other guiding Jimmy as he caressed the mechanism. Next week: Thomas invites Jimmy to the cinema and offers him some popcorn from the suspiciously large box on his lap.

Down the road, mad feminazi Isobel Crawley trashed every known moral touchstone in England by offering maid-turned-prostitute Ethel a job. Mrs Bird, the cook whose expression and demeanour are vinegar-soaked at the best of times, took this poorly. "I cannot work alongside a woman of the..." she said, so angry she couldn't finish the euphemism. "Night"? "Ghetto"? "Horizontal business sector"?

Mrs Crawley was not pleased by the insubordination and flipped into full pithy-smackdown mode – which, when you spar with the Dowager Countess, is something to be reckoned with. Mrs Bird said people might think she too was on the game. "Nobody could look at you and think that, Mrs Bird." Oof! Mrs Bird announced her intention to move to Manchester, where she understood "a plain cook" would be in demand. "They will find one in you," said Mrs Crawley. Ooh, burned, Mrs B. Burned!

The other thing burned, later, was Isobel's dinner when Ethel, newly ensconced, attempted a kidney soufflé. She dropped it as well as burning it and subsequently presented Mrs Crawley with some undrinkable coffee. Leaving aside that most people, even in 1920, would surely be jubilant at the lack of a kidney soufflé, it seems Isobel may have erred.

Carson certainly thought so when Molesley, the pale, reptilian sneak, blabbed about the controversial new hire. The butler, apparently under the impression that prostitution is an airborne disease, gave the order that none of the Downton staff were to set foot in Isobel's house. They surely won't now, so that's fine.

Meanwhile, new kitchen dogsbody Ivy felt the full force of Daisy's authority, as the new under-assistant deputy cook ordered her around mercilessly, like Mrs Patmore without the casual joie de vivre. It didn't help that at one point Ivy was indulging in a three-way flirt with Alfred and Jimmy James when there were vegetables that badly wanted chopping.

Alfred had tried to offset his aesthetic disadvantage by flirting incredibly directly: "I'd like to rinse, chop and boil YOUR vegetables" wasn't actually one of his lines, but he was in that ballpark. Then he got his chance when Ivy's hollandaise curdled. Alfred chivalrously cracked an egg into it.

Anna visited Bates to report that the evidence of the washerwoman she interrogated the other week could be enough to free him. The snag was getting the washerwoman onside, but the bigger threat will come from Bates's drug-dealing former cellmate, who's in league with the screw whose pencil moustache and severe ears really should have alerted the prison authorities at the interview stage.

The scheming wrong-'uns discussed the Bateses' sunny demeanour, vowing to find out what the good news was so they could sour it. Where does Bates keep his letters, the screw asked. The plan was seen to have been hatched later as the screw and the dealer discussed the washerwoman, who it seems may have "pegged it" by the time Anna returns.

Upstairs at the Abbey, Edith received an offer from the Daily Sketch to write a weekly column on the problems faced by modern women, one of the main ones perhaps being beastly fathers who spoil your good news by glowering into the kedgeree and saying the Sketch are just buying your name and title.

But back to Lady Sybil, who was approaching labour and suffering swollen ankles and headaches. There were worse complications in the drawing room, thanks to Lord Grantham's decision to bypass Clarkson, the reassuringly Scottish local GP, and bring in galloping upper-crust obstetrician Sir Philip Tapsell.

Tapsell announced himself as a bit of a lunk straight away over dinner, boasting that he'd wangled three boys out of a nervous duchess only recently, and condescendingly dismissing the possible input of Dr Clarkson, albeit while allowing him to attend the birth.

Once everyone was on the outside of pudding, Matthew waylaid Tapsell on his way to examine Sybil. Earlier, Matthew and Mary had shared another cryptic conversation about parenthood, after last week when she seemed awkward about his reference to a child's nursery. As Matthew outlined his plans to save Downton from Lord Grantham's mis-management by asking their decrepit old farmer to rethink his "derelict buildings with no visible livestock" plan, again there was a hint that all might not be well between the four posts of their bed.

It turned out Matthew was worried that his series two spinal injury, which Clarkson had warned might make him for ever unable to rise for the national anthem, might not have been miraculously healed after all. He blushingly confirmed he was flying at full mast, but he'd been married to Mary for a few months now – why was there still nothing in the oven? Sir Philip said anxiety wouldn't help and told Matthew not to worry.

Telling people not to worry because everything would be dandy was the extent of Sir Philip's medical acumen. Dr Clarkson observed that Lady Sybil seemed muddled and was displaying eclampsia symptoms; Sir Philip waved him away. Dr Clarkson demanded to test her urine; Sir Philip bridled. Dr Clarkson suggested that if they didn't cart Sybil down to the hospital for a C-section pronto, she and the baby might die. Sir Philip downright pooh-poohed it.

The arguments went on, but then suddenly the tension and drama dissipated as Sybil gave birth to a healthy girl off-screen. There have been a few plot lines resolved rather too neatly this series, but this was the most anticlimactic yet.

Or so we thought, until Sybil announced that she was going to sleep now, and hurriedly imparted her wishes to Mary re Tom's plan to work as a chauffeur in Liverpool and christen the baby as a Catholic. Uh-oh...

Genuinely harrowing and brilliantly acted scenes followed as Sybil started seizing in the middle of the night and then asphyxiated as her family and a rather sheepish Sir Philip looked on. All those lightly comical moments elsewhere had been a diversion to disguise the coming death of a major character, albeit one who hadn't been in this series much because she'd already started doing films and other TV programmes.

In the aftermath, Lady Grantham blamed her husband for siding with Sir Philip, Edith asked Mary if maybe they'd be brought closer by their sister's demise ("I doubt it," said Mary, further adding to the material for Edith's bumper first newspaper column), and Matthew put his foot in it massively by being caught discussing the estate's accounts with Downton's solicitor before Sybil had even been carted off.

The tragedy was the sort of extreme situation where experienced old hands take control: sure enough, in came Maggie Smith. The Dowager Countess arrived at the house the next day, veiled in black, greeted by an ashen Carson. "We've seen some troubles, you and I. Nothing worse than this," she said, laying her hands on his before setting off shakily across the lobby, filmed in isolation, a lonely old woman getting ready to bury her grand-daughter.

Smith paused halfway to let her face flicker with grief – a moment to remind us that despite all the soapy giggles, Downton Abbey can still sometimes deliver a mighty emotional punch.

>> Series three, episode four: Branson breaks the law, the servants go sex-mad

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