it's not. you can find him in the evening at the ritual site.
for me going with magic worked best for her. scattershot gives you energy and you can use that energy not just to counter her staus effects, but also to blow her up with a hyper charged energy explosion.
yeah, the rumors mechanic is supposed to introduce these interactions. afaik caroline triggers 2 kinds of those, but the others (skirt peeking, ass kissing, panty thief...) remain a mystery (to me).
from what i can tell the new ending point is after that gory stuff down there, with domenic chilling at the witch hut.
we now have lucy. making use of her doesn't really advances time (despite what the game says), so you can just go to her and level up like crazy. doesn't give you money or items though.
also wanted to point out: if any images stick to the screen you can press L to bring up your phone. cancel and the image is gone.