Pacey "frosting his tips" is to explain Joshua Jackson's bleached hair that he had while filming Cruel Intentions and Urban Legend during the hiatus.
The episode starts off with Joey and Dawson kissing as in the season finale. James Van Der Beek cut his hair during the hiatus and was wearing hair extensions for the remainder of the scene.
First episode to feature Andie McPhee
Joey's joke about hearing Luke Perry was back on 90210 was a tongue-in-cheek statement at the time. 90210 was Dawson's Creek's biggest competitor, airing in the same time-slot on a different network. Luke Perry rejoining the cast was big news in 1998, although his "second first episode" didn't occur until over a month later, in November.
The first and second seasons of the show take place within the kid's sophomore year at school. This often causes confusion among viewers.