I think the narrative reaches it's cresendo here.
Earlier, JA gave her Defence of the novel but here more importantly the novel is being parodied.

NA is a parody of readers who do not excercise judgement and tend to mistake fantasy as reality.
It is also about reading : not just books but people and daily life.

It appears appropriate JA chose the scenario of Catherine imagining the General killed his wife- she imposes ideas from her novel reading on daily life.
Catherine did not use her commonsense or judgement so she misreads the situation, badly.
Her imagination overtook the 'inate commonsense' the narrator tells us Catherine has.

Yet it is not the fault of the novel if a reader such as Catherine or Isabella suspends commonsense and so mistakes fantasy for reality !

Many teenage girls like Catherine are subject to fancies and imagination may outweigh their commonsense. Sure, Catherine made a foolish mistake. Yet I agree with KatyB's point for Catherine this was a learning experience as she is literally shaken into reality.
If Catherine learnt from her mistake, then this is the important thing. The narrator says she was 'completely awakened.'

In regard to the novel, what does Catherine now decide ?

'Charming as were all Mrs Radcliffe's novels, and charming even as the works of all her imitators, it was not in them perhaps that human nature, at least in the midland couties of England, was to be found'. (ch. 25)

So Catherine does not decide she mustn't read another novel, or to burn Udolpho. She resolves on a more positive attitude,
'Her resolution formed, of always judging and acting in future with the greatest good sense, she had nothing to do but forgive herself and be happier than ever;'

JA is aware moral lessons are not to be derived from gothics, some maybe interesting and well written but they are essentially for etertainment. I wrote about these aspects in a couple of other posts so will close here.

I doubt JA intends us to condemn the charecter of Catherine.
Awakened from her Gothic fancies, her inate good sense emerges.