Loved it! Just a few brief comments:
When Lionel was telling Lex that Julian's death wasn't his fault, it was an accident, etc. and Lex was saying he couldn't stand hearing the baby crying, I flashed back to the last episode of MASH. Anyone remember that? Hawkeye was on a bus and he had to keep a baby quiet, but he kept thinking of it as a chicken because he inadvertently smothered it trying to keep everyone alive... That's what I think happened with Julian. For some reason Lex *had* to keep the baby quiet--and I think it was because of Lionel (on Lionel's orders or to protect the baby from Lionel) and the baby died. Maybe he put the baby in the bed with him and rolled over?
Still, whether Lex did anything, accidentally or otherwise, is up for debate. I wouldn't put it past Lionel to wait until Lex fell asleep, smothered the baby, then woke Lex with the accusation.
Why would Lionel kill Julian? Until we find out something about Lillian Luthor that isn't colored by Lex's memories of her, we don't know what kind of woman she was. Julian could have been illegitimate--wouldn't it be a hoot if Lillian had an affair with Morgan Edge (Lionel's best old bud) to get back at Lionel for sleeping with her nurse or just sleeping around in general.
Just some thoughts that wandered through my mind.