College can be a difficult adjustment period. There's the concept of being away from home (and from your parents), not to mention all this relative newfound freedom. On top of that, your freshman year consists of living with someone you barely know, having to get used to all of their various idiosyncrasies, finding stakes and crosses in their bedroom closet ...
Look. As much as we want to believe that Kathy Newman was the Worst Roommate Ever, maybe she wasn't that bad in hindsight. Sure, she was a bit obsessive about scheduling their outgoing calls, as well as her pencil measuring and entire egg labeling system (but that Cher song still kicks, if I'm being honest).
It's pretty convenient for Buffy to peg Kathy as a demon right off the bat, and even though that winds up being the true truth, in the end, Kathy's motivations (aside from trying to periodically suck out bits of Buffy's soul every night) aren't all that sinister. She's just a young Mok'tagar who wanted to leave her dimension to go to college -- you know, like a regular person! And instead, she got stuck with a roommate who was obviously coming and going at all hours of the night, keeping dangerous weapons in the room, stealing her toenails and drinking her milk straight from the carton just out of spite!
It's hard not to feel just a teensy bit bad for Kathy, especially when her dad shows up to take her home and doesn't even bother listening to her defense. Let your demon daughter go to college, my dude. It's a good growing experience! In a perfect world, Kathy could just live with Willow's first roomie instead -- who, from all accounts, could be terrible, but could also just be a wildly different personality (and there's nothing wrong with that).