It’s the second, yes. What Kylo describes in these scenes is what Palpatine told him about Rey and himself after he asked “Who is she?” in the intro. Maybe we can make this clear on his first line instead of talking about pushing her in the desert?

I do agree that a little bit more of justification why Rey’s parents were such assholes wouldn’t hurt. But ultimately, they are irrelevant to this story, as TLJ says. This movie needs to be explaining Rey’s own characterization. We can assume the reason they abandoned her is because of the unnatural circumstances around her birth as well as any strange Force powers she exhibited as a child.

I never had Kylo outright state she is the result of this reactionary Force energy, either. It’s implied, sure, but that is still saved for when they are in the hangar. I also made it vague just how much of a hand he had in utilizing that power to serve his own means. We’re trying to make this as devastating as possible to Rey without shutting the door on the idea that the Force alone made her to stop Palpatine, which is the ultimate conclusion - her being a Jedi and a Skywalker by right.