I believe that part of his initial attraction to Kay was that she was everything that every girl he knew growing up was not. She was not Italian, not Catholic, she was fair, not dark, she was independent, questioning and educated. At the time that he met Kay, Michael was doing his best to distance himself from his family and everything about them.

When he fled to Sicily, he experiences the thunderbolt when he sees Appolonia. He falls intensely in love with her at first sight. At that time, he is in a search for his roots, and Appolonia, being the good Sicilian wife, is perfect for the man that Michael is becoming. And when she is killed, I think that a large part of him dies.

When he returns to America, I think he very coldly decides to go in search of Kay. She was still in love with the Michael that she met in college, the one looking to separate himself from his family and his past. She has no idea about the man he has become, but she's getting older, living in a tiny town in New Hampshire, so she agrees to marry him.

As for Michael's feelings for Kay, I think that he cared for her, but I don't think that she ever had a shot at being #1. Michael decided that it was time to settle down and start his family, so he finds out that Kay had never married, figures that she's getting older and maybe a little nervous about being an old maid, he's comfortable with her, she provides a veil of legitimacy, and he cold-bloodedly proposes.