I have gone back and forth on this issue many times. I think Laura Vandervoort does a great job of playing Kara when the script allows her to. She is strong, determined, and heroic when she is written correctly.
The problem is that the show sometimes forgets what to do with her. She has been mind-wiped, duped by Lex, and sometimes acted rashly.
Still, I think that for the most part, Vandervoort has done a great job with the role. I wouldn't mind seeing her reprise the role in other forums - spin-off, movie, etc.
But the announcement that she is coming back only adds to my concern that they are setting Kara up to be possessed by Darkseid in the finale. In the episode she was in earlier, it was reiterated over and over that the biggest threat to Earth would be if Darkseid possessed someone with Clark's abilities. And since Clark being possessed won't happen, the threat (to be a viable conflict) needs to have that level of power.
Could it be Supergirl? Sure.
Great ... another rendition of Dark Supergirl, this time the vessel of Darkseid.
But I heard that General Zod is also back for an episode coming up. Maybe Zod returns and gets possessedby Darkseid, making him the big bad.
But then I can imagine him killing Supergirl, letting Smallville ape the Crisis on Infinite Earths #7 cover (I can totally picture that in my mind, the League members surrounding Welling), spurring Clark to finally accept his destiny as Superman.
So I foresee Supergirl as either being the villain ... or killed.
That is the pessimist in me rising to the surface. Maybe Smallville will treat her right. Maybe.