The short answer is: we’ll know next week. Maybe.
Episode three is a flashback episode and thus breaks from the formula we’ve seen so far. There’s essentially no fighting, and Yomi doesn’t kill anyone; instead, we get to watch a younger, happier Yomi, all GENKI and YASASHII, babysit Kagura for 20 minutes. Needless to say, I wasn’t exactly pleased. While Yomi would obviously be kind and caring enough to act as a surrogate sister (or mother, really) for Kagura, I think the girlishness is grossly overdone and out-of-character. Taking into consideration her family and training, I find it hard to believe that anyone with her background would act anything like the stereotypical teenage girl we see in this episode. A more reserved and disciplined personality would have been far more credible, not to mention endearing.

You have got to be kidding me.
More importantly, this episode fails to settle the question of whether this show is a manga prequel or not. Obviously, Zero can only be a prequel if Kagura wasn’t actually killed at the end of episode two. While it’s strongly implied that she, and perhaps Nori, are now dead, anime is admittedly notorious for the whole, “wait, they aren’t really dead, tee hee!” cliche that never fails to irritate. Pulling that stunt here may irritate me enough to drop the show entirely, given what they’ve already done to Yomi.
Note: I don’t normally do spoiler warnings, but the analysis below contains MAJOR PLOT SPOILERS for the manga.
Most of the current evidence suggests that Zero is indeed a prequel. The setting and characters are the same, and the plot more-or-less follows the guidance from the manga. However, there are a few anomalies to consider. First, the official website profiles only the Orange Jumpsuit Squad. Unless the website is only there to throw everyone off, I’m puzzled as to why those characters, and only those characters, were profiled if they wouldn’t survive even the first episode. Further, the amount of background we’re given on Toru in the episode itself is completely abnormal for a mere sacrificial lamb. Of course, it’s possible that the entire series will be organized in a non-linear fashion, similar to Yami to Boushi to Hon no Tabibito or Touka Gettan, with Toru and Co. returning in later episodes. While many seem to hate this type of storytelling, it has never particularly bothered me, and if it means I get to see more Natsuki, I’m all for it.

Palette-swapped Natsuki.
The second anomaly is a potential plot inconsistency. In the manga, after Yomi’s disappearance and turning, Kagura doesn’t meet her again, chronologically speaking, until Yomi kills Kagura’s father. In particular, note that in the manga, Kagura is surprised when she’s told that Yomi killed a civilian – this wouldn’t have made any sense if Kagura had already fought with Yomi and seen her butcher her comrades. Further, Kagura kills Yomi in their first and only confrontation, which brings me to the next anomaly: at no point in the manga does Kagura ever use a sword. In fact, there doesn’t appear to be any definitive evidence that she even knows how to. The only weapon she uses in the manga flashback scenes is a two-bladed dagger; the taimaken she uses in the anime is nowhere to be found. She has the dagger in an earlier scene, when Yomi is still sane, and that dagger is what she later uses to kill Yomi. If she’d picked up the taimaken sometime in between, she’d certainly have used it instead.

Now I'm confused. Is she good with a blade or not?
Finally, the manga indicates that people under the influence of the sesshouseki (e.g., Yomi, and Aoi in episode one of the anime) can be saved simply by removing the stone (see chapter 14). Thus, it seems that there wouldn’t have been any reason for Toru to kill Aoi. To be fair though, this inconsistency exists internally in the manga itself – after all, Kagura kills Yomi.
Ultimately, I’m not sure it matters if this show is a prequel or not. Either way, it probably won’t cover the same plot as the manga, which is important because the manga frankly hasn’t been very good so far. As I indicated previously, Ga-Rei Zero flew under my radar exactly because the manga was mediocre; as long as Zero sticks to new material, it should be fine. I’m especially looking forward to seeing Yomi rack up the seventy kills she’s supposed to get against the Ministry – if the first two episodes were any indication, it should be a wild and grisly ride.

More please.