A number of plot points will inevitably be revealed in the course of these writings. My intent is to review this program from the perspective of the Doomer / Prepper / Survivalist community, but, to do that effectively, some things have to be explained in greater detail than I might normally prefer in a review. As a result, spoilers will follow. You have been warned.
Episode 12 begins with several members of the group checking the fences around the farm to insure that they remain intact and clearing the nearby area of Walkers, interspersed with shots of Rick speaking at Dale's funeral. He talks about Dale's assertion that their group "is broken," and makes it clear they they are going to honor Dale's memory by proving him wrong in that regard. He has now abandoned the idea of executing Randall in favor of the old plan of setting him free, but this time they'll take him further away and leave him with a few days worth of supplies.
Hershel extends the group's stay, at least through the coming Winter. Everyone (14 of them) are piling into the house where they will be more secure. Camping out in the fields will no longer be feasible with the creek/swampy area soon to dry up or freeze over; previously, it had acted as a barrier, but that will change very soon, and, with a large number of cattle on the property, it is commented that "they might as well ring the dinner bell." A bit later, Hershel overhears that Rick, Lori, and Carl will be bunking in a corner of the living room, and he insists that they take his bedroom instead and leave him with the couch. There's no way he could sleep in his bed, knowing a child and a pregnant woman were sleeping on the floor.
As for security, Rick orders lookouts in the windmill tower and the barn loft as those spots best offer an elevated view of all the sight lines. Hershel, thinking ahead, plans to stock the basement with enough food and water to allow all of them to be able to survive there as a stronghold for a few days, if the need arises. Rick puts it on Andrea to keep a handle on Shane, while he and Daryl take Randall off, because he knows she has Shane's ear and he trusts her.
Carl, guilt-ridden over his part in what happened to Dale, admits everything to Shane. Shane tries to console him and tell him that he should keep the gun. He says that he would never let anything bad happen to him when he was around, but that he can't watch him every minute; only Carl can do that himself. He refuses and runs off, however, vowing never to touch another gun again. Later, Lori approaches Shane as he is building a platform for a guard-post part of the way up the windmill tower. She expresses regret over everything that has happened, but it is tempered by immense gratitude for all Shane had done for them. She doesn't want him to leave the group, and, for his part, Shane is left speechless.
As they are planning their route, Rick broaches the subject of Daryl stepping in to do the deed to end Dale's suffering in his place. You can tell Rick wants to thank him, but Daryl stops him before he can, making it clear that he understands. He says that he doesn't see why Rick should have to do all the heavy lifting. It is at this point when Daryl, who had previously been pulling away from the others, begins asserting himself as an important part of their little community, and that makes me pretty happy. I like Daryl.
Shane tells Rick about Carl, offering to go with Daryl in his place, so that he can talk to the boy. It is obvious, though, that he doesn't trust Shane to carry it out according to his plan. Shane, disgusted, tells Rick that freeing the prisoner is more important to him than his own son, and stalks off.
Elsewhere on the farm, Andrea and Glenn are fixing up the RV and thinking about their lost friend. Glenn believes that he let him down by not supporting him on the Randall issue, but Andrea tells him that Dale was proud of him overall, even if not in that moment, and he knew that they cared for him.
Rick finds Carl is the hayloft for a father-son heart-to-heart and gives him back the gun. He tells him that what happened to Dale was not all his fault and that needs him to grow up. He wishes that Carl could have had the childhood he himself did, but that's not going to happen. The truth is that people are going to die and the best they can do is stay ahead of it.
Meanwhile, Shane sneaks into the shed where Randall is imprisoned and seems to fight with himself over whether or not he should just kill him right there. It's obvious now that Shane has gone off the deep end. He sees that Randall has been trying to work his way free from restraints and has bloodied his wrists in the process, and the next we see is T-Dog coming to fetch the prisoner for his trip, only to find him gone.
In the forest, Shane makes Randall believe that he wants to join their group and needs him to take him to them. Randall tells him that they had been camped about 5 miles away, near the highway, but he's not sure if they are still there. He rattles on with nervous chatter about how Shane will like it; it gets a little crazy sometimes, he says, but they're a tough bunch of guys, and Shane will fit in well with them. It is a ruse, however, and Shane soon breaks the boy's neck, killing him instantly. He then bashes his own face into a tree to make it appear that he's been attacked, hides his gun under a pile of leaves (he's about to tell them Randall took it), and then heads back to the others to sell his lie.
Rick orders everyone into the house for protection, as he, Shane, Daryl, and Glenn go on a manhunt to locate the fugitive who they have been told is armed. They split-up -- Rick and Shane go one way, Daryl and Glenn another, but not before Daryl makes it clear that he has a hard time buying that a guy Randall's size could get the drop on Shane. Eventually, Daryl's tracking skills allow him to discerns where Randall and Shane were apparently walking in tandem at one point before fighting. They soon locate and dispatch Randall, who has somehow reanimated as a Walker, even though an examination of the body reveals that he died from a broken neck and was not bitten. This is tied to the incident in episode 10 where Rick and Shane also find Walker bodies with no obvious bites.
Elsewhere in the woods, Shane continues to lead Rick further out into the wild, and Rick soon becomes suspicious, realizing that his friend intends to murder him. I guess knowing that Lori still cares for him, but he can't have her with Rick around, and seeing Rick more interested in dealing with the Randall situation than in Carl's emotional distress (he didn't know that Rick did actually sit down with Carl) has finally pushed him over the edge. He pulls his gun on Rick, who instead holsters his own and tries to talk his way out.
The negotiation, however, is also a ploy, but this one of Rick's making; he edges his way toward Shane and, it seems, is about to get him to give up his gun, before pulling his knife and stabbing Shane in the chest. As Shane dies in his arms, Rick curses him for making him do it and cries woefully.
Just then, though, he is startled to find that they were followed by a shocked Carl, who apparently saw the whole thing. Carl raises his weapon and points it at his father, who tries to explain, but then Carl shoots and kills Shane who has also reanimated as a Walker and is about to attack Rick from behind.
Neither of them seem able to understand how Shane became a Walker; and neither of them are aware that the gunfire has attracted a huge herd of Walkers from the nearby woods, which the camera pans to show are bearing down on them before fading to black.
With regard to the series narrative itself, this episode is monstrously important. It represents not only the climax of the sad disintegration of Rick and Shane's relationship that has been brewing for 2 seasons (and, apparently, had its seeds in their old life), but it is also clear now that the disease that causes the Walkers to rise is more nuanced than being caused by a bite as was previously believed.
For our purposes here, there were several things in this episode of which we should take note as Doomers / Preppers / Survivalists, et cetera. I liked the fact that the characters were getting ready for Winter by retreating into the house. Smaller spaces are infinitely more defensible, as I have argued previously. Ditto for Hershel's awesome idea to pre-stock the basement with food and water as a refuge of last resort, not unlike the keep of a castle. In addition, I also liked them utilizing both the hayloft and building a platform in the windmill tower as very castle-esque watch-towers.