I agree with all that's been said about Kay. I believe that she sincerely began to question her life, and the life that she was allowing her children to live in by the time Anthony's communion rolls around in GFII.

There is a deleted scene, which I think backs up this theory, where we see Kay chasing Anthony (during the communion) and Anthony comes upon a house on the compound where the Corleone soldiers and bodyguards are all sitting around. Anthony stops in his tracks and stares while Kay catches up to him. She herself has a look on her face of both disgust and sadness, as though she's realized that she can no longer protect the boy from seeing these kinds of things. As though she realizes that she's only been fooling herself all these years.

The next scene between her and Michael, is the dancing scene where she questions him on what he once told her about taking the family to legitimacy. I believe that at that point she still loves him and wants to believe him, but realizes that it was never going to happen. And then as Turnbull said, later on that evening, the shooting up of the house is what pushes her over the edge.

However, in fairness to Michael ..... It's the buisness she had chosen.