Good point...I hadn't remembered those scenes. Matt's power has been shown to put strain on its' target, and I suppose we haven't really seen an extended mind-reading session before. Usually it's a second or two of Matt focusing, and then we're done. Maybe when the mind-reading is drawn out the effects are harsher. I'll buy that.
As for Matt being a jerk...I'm not disagreeing that it's believable. It's entirely believable. It doesn't make his behavior appealing. I really wanted to root for someone in this episode, but I just couldn't.
In hindsight, though, I like the resolution of the Hostage Scene better than I did on first viewing. Matt turns on Mohinder, but in the end, they're friends again, and Mo does what he can to make it right. Peter flies off and does something hot-headed and impulsive, because that's who Peter is, but in the end he comes back to save his friend, rather than kill his enemy.
I do wish that Matt had pulled off some crazy Mind Mojo in the final scene, but I can live with the fact that he didn't.