
The Enterprise has arrived at the planet Kes/Prit in order to review the Kes following their petition to join The Federation. This is an unusual submission as the planet doesn't have a one-world government but two. The Kes are a more diplomatic and "democratic" people who occupy a majority of the planet but one country/continent still exists -the Prit- who're more xenophobic, to the point no real formal means of communication has existed between the two groups for over a century.
Picard worries this planet is too much of a deviation from the Federation standards as usually having a one-world government means a people have worked through their planetary cultural, racial, and other differences and are ready to join the interstellar community. Crusher, seems okay with the notion, wondering if Picard would be against Earth being allowed into the Federation had Australia not been part of Earth's one-world government. (And odd strawman since Earth was a founding planet of the Federation and didn't "join" in the sense that Crusher suggests.)
Picard and Crusher (for, uh.... reasons) are set to meet with Kes leaders in order to set-up the formal arrangements, being while beaming down their transporter signal is somehow redirected to Prit territory and the two are lost.
On the ship, Riker works with a group of people from Kes's intelligence branch in order to recover Picard and Crusher. The Kes recommend using covert tactics to recover the lost crew but Riker initially prefers a more diplomatic approach, even after he's assured by the Kes people that such a thing is impossible.
On the planet, Picard and Crusher awake in a Prit prison cell with implants attached to their brain-stem. They're told by a Prit leader that the implants will allow the Prit to read the thoughts of Picard and Crusher in order to find out why they're really there; fearing the Kes and Federation are conspiring together in order to take over the Prit.
Some time later a Prit prison-worker delivers a covered tay to Picard and Crusher, at first they believe it's food but when opening it they find a modified tricorder. The tricorder has been programmed with a way to exit the cell and sneak into Kes territory to be rescued. They decide to attempt to the escape.
Enroute the experience strange effects from the neural implants, at first getting flashes or glimpses at the other's thoughts and feelings, as they continue their journey the flow of information between the two grows stronger tot he point where they're hearing the random and impulsive thoughts of the other. Crusher noting Picard makes guesses on decisions to give the appearance he knows what he's doing, Picard noting Crusher always has some snarky remark in her head. They try and to distance themselves hoping that the connection will weaken, but they find they grow nauseous when they're too far apart.
Along their given escape route they find someone guarding the trail and they seek an alternate escape.
On the ship, Riker has failed to achieve a diplomatic solution and opts for the more hands-on approach recommended by the Kes; only to discover their plan is already underway and Crusher and Riker are enroute to meet with an embedded officer.
Later the Kes intelligence officer begins to grow suspicious of Riker and the real intent behind the Enterprise's visit, especially after Crusher and Picard failed to rendezvous with their embedded agent. Riker grows annoyed with his increasingly absurd assumptions and accusations and suggests he leave the ship.
Picard and Crusher make camp for the night and as they sit by the fire begin to have a more intimate conversation about their relationship where it's revealed that Picard has had strong feelings for Crusher ever since he first met her; but never said anything since she was with his best-friend.
After Jack died, Picard still avoided sharing feelings with her in respect for his friend, hence his apprehension when Beverly first came to the ship. He worried of his romantic feelings reasserting themselves. But, instead, he found them no longer there and instead began to appreciate Beverly as a friend as their bond was rebuilt after not seeing each other for nearly 20 years. (Well, closer to 15 given Wesley's age in S1.)
The following morning Crusher and Picard continue to make their way to the Kes/Prit territorial border.
Ont he ship, Riker brings the Kes intelligence officer back on board in order to ambush a confrontation between him and the Prit intelligence officer via the viewscreen. When the communication breaks down again he kidnaps the Prit officer tot he Observation Lounge and forces a conversation between the three of them.
The conversation eventually collapses as the paranoia between the two people becomes more and more apparent, so Riker tells the Kes they will not be admitted to the Federation under his -and Picard's- suggestion. That while they're a kind, democratic, people their paranoia consumes them.
He then pokes at the Prit's xenophobia telling them how intense the investigation from the Federation will be should Crusher and Picard not be returned. A dozen ships in orbit, sensor sweeps, communications forced and even away teams. The Prit officer gives up Crusher and Picard just as they reach the border and are captured by Prit security officers.
Once back on the ship, and having the implants removed, Crusher and Picard share in a romantic dinner and discuss their experiences. Picard says he's open to exploring a relationship with her now that everything is now in the open, but Crusher seems more reluctant to go down that road at this time.
Picard: Denied.
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As a Picard/Crusher..... *sigh* "shipper" it's hard to not really like this episode and smile during it when we see the interactions between Picard and Crusher. I don't think the "romance" between them was this heavily handled since Season 3's "Allegiance" and, well, that was between a Picard replicant and Crusher, but Crusher's feelings are explored and depending on how much we want to interpret the replicant's portrayal of Picard maybe some of his deeper feelings were explored as well.
Gates McFadden is almost irresistible in this episode between her over look and just her more fun facial expressions during some of her more "Crusher moments," like when talking about her snarky demeanor and how it hurt someone she dated in her teens. And the deeper, more romantic, moments with her are also touching as well. It's really easy to watch this episode and see the connection between her in Picard.
Patrick Stewart and her play off one another very well, as the did in S1 where the suggestion of a relationship between the two of them was in play before being all but eliminated on Crusher's return in S3.
It's really a sweet episode and probably one of the very few times TNG did anything related to romance and love well. (Wait for it!)
It's very odd, however, that the notion of allowing the Kes to join the Federation was ever entertained. I guess they could send in an investigation just to placate or give lip-service, but it a lot of sense that a planet has a one-world government in order to join The Federation. As said, it first of all says the planet has solved any and all internal difficulties. I mean, what could really become of aligning with part of a planet when another part of it is a bunch of reclusive xenophobes who seem to partake in North Korea levels of isolationism and manipulation of their people, to the point of impacting their leaders own views of the world around them?
So... Could Starfleet reverse-engineer the mind-reading device? They seemed to operate independently without any need of having communication with a larger system, since they worked on the ship and the Prit are said to have no means of communication outside of their country.
Seems to be reverse-engineering the devices could be beneficial to Starfleet (at least its intelligence wings) or, hell, just let Picard and Crusher put them on again if they ever want to play around in the other's mind some?

The ending is a pretty blatant "reset switch", not something TNG did a lot and when they did do it it wasn't too terribly done. (See: Voyager) But having Picard and Crusher become aware of the other's feelings and then for them to pretty much decide not to pursue things is a pretty big reset switch, changing things superficially in order to not upset the status-quo. I mean, how *is* their next breakfast going to go when Crusher comes over and Picard's mind is all, "man, didn't she just deny me last night, even after we know how the other feels for really sure?"
It would have been nice if, this is the last season afterall, the writers just let Picard and Crusher hook-up. It wouldn't have to be dealt with that much in the remaining 18 episodes or following movies, but they could have done *something.*
And then there's the AGT future which I don't accept as being "real" and just Q dicking around with Picard. I think it's fine to feel Crusher/Picard hooked up sometime after Nemesis and lived happily forever. So, neyah!