Spoilers ahead for Episode 14 of Gotham Season 4, called "Reunion."
Gotham is never easy to predict, and alliances are constantly shifting between the good guys and the bad guys alike. The one relationship that seemed broken for good by this point in Season 4 was the one between Penguin and Ed Nygma. Their friendship appeared to be irreparably damaged after Penguin killed Ed's girlfriend out of jealousy, and the two engaged in an escalating series of attempts to take each other out. Their battles were generally as entertaining as they were ridiculous. In "Reunion," however, Penguin and Ed found themselves back on the same page, and their renewed partnership could mean big things in the rest of Season 4.
First and foremost, the new team-up is a sign that Ed is on the verge of going full Riddler again despite falling in love with Lee Thompkins. Ed has been teetering the edge of sanity all season, and he's been losing his grip lately. Lee hasn't seemed to notice that he's fighting a losing battle with his psycho side, but Penguin caught on right away last week when Ed showed up at Arkham for a visit. That episode ended with Penguin writing a letter to Ed, and "Reunion" revealed that a riddle was hidden in the letter that only the Riddler could understand. The Riddler convinced Ed that the only way to protect Lee without killing himself would be to check into Arkham. When Ed was right on the verge of signing himself in, Penguin showed up and Ed realized that Penguin had managed to conspire with the Riddler side of his personality to get him to a place of full-on villainy again. The Riddler is back, and that means a lot of danger for the good guys moving forward.
It's also worth noting that Penguin and Ed were all but unstoppable together before their falling out. Assuming that Penguin isn't going to fall back in love with Ed after all their attempts to kill each other, their partnership could take them back to the top of the criminal underworld. They may still sabotage and mock each other at every opportunity, but they could be difficult to beat by any others. Now that Ed is going full Riddler, he'll presumably be brilliant once more
Of course, the criminal underworld is currently controlled by Sophia Falcone, and she just proved in "Reunion" that she's not to be crossed. After Lee tried to leverage Sophia into lifting an illegal tax that she wanted to impose on the Narrows, Sophia had all of Lee's men shot and then smashed her hand with a hammer until it was a bloody mess that looked barely connected to the rest of her arm. Sophia is not to be messed with, and she's a whole lot more sane than a lot of the other baddies in Gotham City. She may be power-hungry, ambitious, and ruthless to the extreme, but she's not exactly hallucinating versions of herself or doing bizarro mime dances after threatening to attack enemies with a spork. That said, her decision to go after Lee may put her in the sights of the Riddler and Penguin.
Riddler likely hasn't entirely overtaken Ed, and Ed was so set on protecting Lee that he was willing to lock himself up in Arkham. Sophia's attack on Lee could mean that she's an enemy of two of Gotham's most unpredictable villains. It's also possible that Penguin and Riddler will have another bonkers bad guy on their side. Penguin made an impression on Jerome in the previous episode, and Jerome was only biding his time before escaping. The preview for next week's episode shows the Riddler breaking Penguin out of Arkham; when Jerome inevitably gets out as well, perhaps he'll team up with Riddler and Penguin.
Then again, maybe Jerome will be more inclined to hunt down Penguin and his associate after how Penguin snubbed him. Either way, he could be a fun variable in the Riddler/Penguin dynamic. In the not-too-distant future, we could have Penguin, Riddler, Jim, Lee, and their assorted underlings facing off against Sophia Falcone and all her cronies, with Jerome causing chaos on the side, Selina battling it out against Ivy, Bruce playing baby Batman, Barbara getting in everybody's way, and the dysfunctional love story of Butch/Solomon Grundy and Tabitha getting even more dysfunctional. Oh, Gotham. Never change!