Nelson and Lisa hold hands, referring to the episode where Lisa dates Nelson. They also discuss the time they were dating.
It is heavily implied in the end that the two still have feelings for each other. This was also seen at the end of "Lisa's Date with Density", where they break up, but on good terms, and even smile at each other.
Lou went undercover in Fat Tony's mob (which Homer will do in another episode this season).
Wiggum accidentally exposes (or almost exposes) Lou as an undercover cop when Lou is at dinner with Fat Tony and the rest of the mob.
This is the third time Wiggum has outed someone going undercover in Fat Tony's mob. The first time was in a Simpsons clip show where he told Homer they had a guy undercover who he then pointed and waved to that guy who was standing in front of Fat Tony. The second time was when Bart went undercover to buy fireworks and Wiggum called out Fat Tony's name exposing that Bart was wearing a wire.
Officer Lou has been with Wiggum when he arrested Fat Tony in other epsiodes so the mobsters should have recognized him right away, although that's part of the joke that they didn't.
The Italian mob has a rule that you have to be Italian to join the mob. Either Fat Tony doesn't follow that rule or Lou lied and said he was part Italian when he joined as part of his undercover persona.
Nelson couldn't have dropped out of school as it's a legal requirement to be in full time education until the age of 18.