I can't find the clip with King Leopold & the Genie on the internet (free) but I do have it on TiVo,
(The Genie meets with King Leopold in one of the rooms at the castle.)
Genie: You called for me, Your Majesty?
King Leopold: I have reason to believe my wife’s heart belongs to another man.
Genie: Certainly, the Queen would never stray, Your Majesty.
King Leopold: And yet, her diary suggests otherwise.
(The King hands the Genie the diary. He silently reads it to himself.)
Diary(in Regina's voice): Last night, a man gave me a gift. And though it was but a simple mirror, it awakened feelings in me that I abandoned long ago. Hope for love and companionship, even though I am trapped in my husband’s court.
King Leopold: Sadly, the diary does not name the man who gave her this mirror. I am not a fool – I realize that the Queen is unhappy and yearns for someone to love her in a way that I never can. And yet, I never imagined that she would betray me like this.
Genie: Well, certainly the Queen would never act on these feelings?
King Leopold: Love makes people do foolish things.
Genie: And why have you called upon me, Your Majesty?
King Leopold: I need someone with your wits. To learn the identity of the man who has stolen my wife’s heart.
Genie: And, what will you do to him once I have found him?
King Leopold: That is my concern – not yours. Now, tell me, Genie – can you find the man who gave the Queen this mirror or not?
(King Leopold picks the hand mirror off the table and hands it to the Genie.)
I'd say his response was ambiguous, not sinister. And while it was not right for King Leopold to read Regina's diary, it was clearly a manipulation by Regina who wanted the King to find it and read it. As we know, she never loved the Genie (or her husband) as we see magnificently played here: Regina & Genie after having killed King Leopold (You Tube)
Considering King Leopold was the one to genuinely have something to worry about, as Regina already had her plans in place to kill King Leopold, I would say he was rightfully concerned about a betrayal. I would not think it uncommon for a King to be vigilant for such betrayals/coup d'etat attempts, even from within his court.
I found several things interesting about this transcript exchange.. first the phrase 'Stolen my wife's heart' is pretty funny, given Regina's collection of said organs. Secondly, it made me think that King Leopold and Regina probably had a fairly erm.. 'hands off' relationship.
I'd love to know what Regina knew about how the curse would play out/how much control she has over the circumstances in Storybrooke and how much was built into the curse by Rumpelstiltskin, but that's something we'll probably never find out. :(
Regina is the villain in this story. Regina & Rumpelstiltskin, not together, but each in their own way. Without us 'loving to hate' them, it wouldn't be much of a story. The Evil Queen is pretty evil, even in the traditional story.
That said, I do love the way Lana Parrilla brings this character to life, but I have about as much sympathy for Regina as I do for Cora, who probably also acted out of desperate circumstances and has her own tragic back-story.