In the fairy tale world, Red Riding Hood is a passionate young woman who lives with her grandmother and has a sweetheart named Peter. She wears a red cloak, which her grandmother reminds her to keep on, saying that the color repels wolves. The fear of wolves is not without reason -- the area has been plagued by a wolf that's killed a bunch of locals. Red's grandmother even locks down the house every night and sits in a rocking chair, crossbow in hand.
Red and her grandmother take in Snow White, and the two young women decide to hunt the wolf down and kill it.
When there's something I want, I'm good at tracking it down, Red tells Snow White.
In Storybrooke, the relationship between grandmother and granddaughter is far more tense. The granddaughter, Ruby, is a provocative-looking gal who works at her grandmother's diner and has an itch to ditch the small town life. Her grandmother chastises her one day for her lack of focus.
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You dress like a drag queen during Fleet Week, she tells the younger woman.
And you dress like Norman Bates when he dresses like Norman Bates' mother, Ruby counters, referring to the protagonist of the book and movie adaptation of Psycho.
Ruby quits her job and leaves home. She's taken in by Mary Margaret (ie Snow White) and Sheriff Emma Swan. She ends up working for Emma and is so good at finding stuff out that Emma sends her on a search for clues in the recent disappearance of Kathryn Nolan, the estranged wife of David Nolan (ie Prince Charming).
Just follow your instincts, Emma tells Ruby.
Ruby finds a heart inside of a box. She's grossed out, but Emma is thrilled, as they have found a valuable clue.
I know you say you don't know what you are but whatever it is, I gotta say I'm impressed, Emma tells her.
It turns out that Ruby has these innate skills for a reason. Red Riding Hood is the wolf, and she has to wear the red cloak -- which her grandmother purchased from a wizard -- to keep herself from transforming. She doesn't know it, but the wolf thing actually runs in her family. Red's grandmother used to transform (the wolf stuff lessened with age), as did her mother, who was killed by a hunting party.
Her grandmother and Snow White find Red Riding Hood in her wolf form (she had removed the cloak). They take her down, throw the cloak over her, which transforms her back to human form, and whisk her away before the hunters find her. Unfortunately, she already killed her beloved Peter. The young lovers mistakenly thought he was the wolf and agreed that he should be tied up in chains before transforming so as not to harm anyone. Red is devastated to learn the truth.
In Storybrooke, Ruby and her grandmother reconcile. The episode ends with the revelation that fingerprints inside of the box containing the heart, believed to be Kathryn's, are not David's, as that one feared, but Mary Margaret's.