I really enjoyed reading your insightful and entertaining analysis of episode 198. It was like re-watching those scenes with your pointing out specific statements and gestures. I hadn't noted some things like JS' emphasis on relationships while JH's pepero kiss is going on. I had also not paid that much attention to the scene where JH's phone rings. Watching it again, I also felt it was an inside joke. JK's statement there is sure interesting!
I wonder though how much JH was aware of what she was putting JK through. I suspect that for JK, the challenge wasn't really about watching JH do her pepero kiss (though we know watching it makes him quite uncomfortable) since he has seen Gary do it with her before (he was even guiding JH there on how there was a need for Gary to hold her head as he came closer to her face) or about having to do it with a woman in front of the camera, but more about having to do it with another woman in front of JH. It is when JK finds that he is facing JH that he tries to make that excuse about needing to find a comfortable position for Yeon Soo and changes his position so that he is not facing JH. Later when he is about to start the pepero kiss, his statement about finding people staring at him uncomfortable while he is doing the game is mostly meant for JH (and predictably enough, it is JH who responds hotly to that statement). I wonder whether JH thought it through. Most probably, she thought it would be harder for JK since he was so shy around women and would lose easily. I think JK is a bit upset at having been chosen by JH and that gif which @aschae linked is to me more about JK being upset with JH for dragging him with her than a reaction to her immediate statement.