Well, given that Sarah and Kyle had so little time together in T1, I would expect her delusion-infused memories would be comprised mainly of the words they said to each other over the course of the movie.
That was supposed to be like 17 years ago, though, right? Can you remember exact phrases someone said to you 17 years ago? To this level? Word for word and every phrase? I'd find it more believable if she had forgotten his face seeing as she only knew him for a couple of days, but I'm probably expecting too much in terms of being realistic. It would be much more impressive to me if she did forget.
For a normal memory, sure. But those few days were an extremely intense and traumatic experience, so it's not unlikely that the details of it have been seared into her memory. Plus in the intervening years she's probably gone over and over every moment in her mind, recording those tapes for John, telling John herself and later in the institution. I'm sure that after all that she couldn't forget any of it if she tried.
As for the vision of Kyle, I really liked how they mimicked the costume from the first film, down to the stolen sneekers! Plus of course the idea of a Kyle vision is taken from a deleted scene from T2, which is a nice touch.
The more I watch this show, the more I appreciate just how much the writers are retaining from the films, with nary a liberty taken.