This is a representation of Phoebe realizing that not all is at it seems with Katie. The conversation is a ladder that she is using to climb out of the hole she is in even as she fights to defend her actions. Then the final part is Katie coming up and grabbing her, dragging her back down with her and further isolating her by blocking the contact. The feathers falling away a representation of her losing her innocence.
It seems that Pheobe knows this is wrong at this point in time. But she can't break free because she still thinks that Katie honestly loves her. Not realizing that it isn't love, but lust.
This is a dark story that is grounded in reality and its a uncomfortable read. You want to love their interactions but you cant help but notice the cracks in the facade. Its so cute on the surface, hits all the right buttons for IB. But then you look at it in its totality and it kind of shines a light on something you try to ignore within the site itself.
Given what I've read I can only assume that: This is a representation of Phoebe realizing that not
