Great argument, Turnbull. Strong enough to convince me you are correct.

One other point in favor of it being a miscarriage is that something truly egregious needed to happen in order for Michael to "allow" her to leave. In fact, it is not out of the question that Kay came up with the abortion story then and there, during that very conversation, when Michael said he could never allow Kay to leave. His exact words were "Kay what do you want from me? Do you expect me to let you go? Do you expect me to let me take my children from me? Don't you know me? Don't you know that that's an impossibility -- that that could never happen. That I would use all my power to keep something like that from happening -- don't you know that?" At that point, she may have seen a ruse as her only way out.

The only arguments to the contrary I immediately see are;

Falsifying an abortion when divorce was imminent could easily negatively affect her in a divorce court of that era in regards to child custody. It shouldn't, but it could be an indicator of one not being a safe custodian through the antiquated reasoning of the day. Plus, an abortion then was an illegal act (preposterous, I know, to contrast that with the actions of a mafia don) and could be held as further grounds to deny her custody.

A lesser argument is at no time did she ever admit to the deception. This, while noteworthy, does not convince me of much. What good would it have done to admit it, either shortly after the statement was made or decades after the fact? She may not be believed, it would reopen old wounds, and would not serve any positive purpose.