And why doesn't the assassin react to seeing [Kosh]
The Minbari know who the Vorlons are.
It's just this one episode started and I was like "Ugh... mind reading / controlling episode". I'll get around to watching it, probably tonight, I just don't like mind episodes.
That's not really what "And the Sky Full of Stars" is about; it's about Sinclair's character, and some background information that is revealed. The mind-reading stuff is just a delivery system for the meat of the story.