I thought one of the jail guards did recognize Katherine, but assumed that she was a look-a-like. I have to admit that Jill's reaction seemed pretty normal to me - I mean, she saw "Katherine" in her coffin, I would be convinced that the old woman was dead too. Plus, Kay was very vague and weird when Jill confronted her, and that's definitely not the Katherine that Jill remembers.
What I find odd is that Gloria knows for sure it's Katherine, and she's not shouting it from the rooftops. What would she have to gain from keeping it quiet? She was obviously enough in Kay's good books to get that stock, and even if Katherine turns up alive how would she get them back now that it all belongs to the Abbotts?