I do think that Snape did have feelings for Lily at that time... and I think that there were many things that contributed to Snape loathing of James, the Lily thing just beign one of them, later on aswell, because as we saw, she really wasnt' that fond of James at that stage!!!
And about the worst memory thing, this is how I saw it... Snape knew that Harry woudl be able to see things from in his mind, like he did at one stage, so he wanted to get all his memories of his school times with James, expecially the ones where he came off worse, out of his mind and into the Pensive so that Harry wouldnt' see them... (didn't work though, did it
) I don't think that that was necessarily the worst one...
He probably woud have taken out other things that he didn't want Harry to know, like about his times with Voldie as a DE, and what made him go spy for DD...
Anyways, that's what I thought!