Kath is still her daughter but so far dev has no plans for anything to happen with her.
If you consider some exchanges posts and reaction and replies here on F95, including from Zorlun (the most important ones), it was considered the possibility of some scenes involving Myriam and Katherine and sexuality.
More with a Myriam acting as guide or mentor to Katherine (not guaranteed that would have implied sexual interaction also between them, but not strange).
It was also a kind of reverse of the one with Marc, the one with Marc being anyway more negative (even if Myriam was playing dominant), the one with Katherine more soft, based on love and positive (and anyway meant as something temporary, again, Myriam as a kind of mentor).
The only thing that Zorlun clearly and explicitly excluded from the start, was the possibility of Marc having sex with Katherine.
However, all that is certainly gone down the drain now, given the Patreon intervention :-(.
There is complication of making a version with still that incest element in and managing different versions of the text, and the fact Zorlun has indicated that Patreon has basically threatened him to kill his account even if they discover he has another version of the same game on another platform that violates their rules.
I don't play games only because have incest, most games I really liked and even supported, do not have that element at all, but the way Zorlun had mastered to weave it in the story, to me made it something really having a part of the story, although not the main focus, so I would say the change it does have a visible impact (e.g. it gives less reason for some of Myriam dilemma and stress)
But I am still supporting Zorlun, because I undestand he had made a whole storyboard in which that was clearly not the only element, but was also clearly one, and now Patreon arrives and screws him up out of the blue.
I think (but I cannot say for others, of course) that it would be wrong if he was penalised for something he had neither control, nor could foresee at the start would happen.