Having now seen the episode, I dunno if they're having sex or not. The writers were certainly implying it, but then the writers have been known to push us toward something purely as misdirection.

True, true. And they may only have made it seem that way because they needed an excuse as to why she was in the room with Sam. PLEASE let it be that, or I will have a serious, serious problem this season. Because no, I don't think that Kristy is letting a demon borrow her body!

Consensual possession. Huh. Castiel does it.

Or at least that what he says, eh?