Just my opinion, of course, but I think the "That's my family, Kay. It's not me." exchange has a strong sexual component to it, almost as if Michael is making his move and seeing if Kay will stop him.
You have the line in Goodfellas where Henry gives Karen a gun to hide and she says, "I gotta admit - it turned me on," and I think Kay is the same way.
Sounds reasonable to me. Quite possibly with her conservative New England background, she wanted to walk on the wild side.
