The story begins with a sad priest, Father Schwartz, crying to himself. He cries because he is trying to pray and "complete a mystical union with our Lord" but he is distracted, we might even say "tempted," by the sounds outside of "Swede girls" with their "shrill laughter." He also is distracted by the glimmering sights and sounds of the stores: tempted by the materialistic world.
In walks Rudolph Miller ready to confess his terrible sin. Part II is a flashback explaining this terrible sin. Rudolph is commanded by his very strict, very religious father to go to confession. Rudolph confesses but lies during that confession (the lie being that he never lies). He is overcome with grief and guilt and is afraid to take communion the next day because it would be a sin to do so following a lie in confession (therefore, an incomplete confession). His father catches him drinking water (evidently a sin prior to communion), beats him, and orders him to go to communion. Rudolph's only escape from feeling alone or guilty is to become Blatchford Sarnemington, a more noble, suave version of himself. Rudolph would slump in the pew when he was alone: a "subtle revenge." So, Rudolph does have moments of rebellion. His role as Blatchford is also a way of rebelling by escaping his religious (and other) responsibilities. This romantic imagination is something that seems like a sin to him (a king of lying).
Rudolph takes communion and concludes "that it was a dark poison he carried in his mouth" -still full of anxiety and guilt. Back to the present in Father Schwarz's office: Rudolph has told the priest this entire story. Father Schwarz gives him odd, seemingly illogical replies of nonsense. Father Schwarz, maybe inspired by the vivid blue of Rudolph's eyes, is moved to embrace his own romantic imaginations. Remember, at the beginning of the story, the priest is trying to ignore his imagination. But he gives in here and gets lost in his own world. Rudolph, frightened, leaves in a hurry. The narration closes with descriptions of young men and women together (supposedly intimate) at night: symbolic of the temptations of the real world and of romantic imagination.
Father Schwarz undergoes a change. At the start, he is denying his imagination and the sounds of frolicking girls outside. At the end, he goes on a nonlinear rant, fueled by his imagination, sort of becoming his own Blatchford.
Rudolph's changes are more subtle. He is filled with guilt at the beginning. And although that continues, he does show signs of rebellion, in which case he casts that guilt aside. At the end of the story, he is confused. But we might also interpret that Rudolph eventually discerns that the priest was indulging in his own "glimmering" fantasies, albeit in an odd way. If this is the case, Rudolph might not feel so bad about indulging in his own fantasies, impure thoughts, or of committing certain sins.