In my personal canon, the Gwuncney plot is Courtney realising mid-season that she's bisexual and has a thing for alternative fashion. She feels guilty for her growing feelings towards Gwen when she's still in a relationship with Duncan and, as such, tries her best to hide them.
Gwen initially mistakes Courtney's sudden reluctance to be around her as a wrongdoing on her part and tries her best to reconcile, leading to Courtney eventually losing her patience and angrily confessing that she's trying to suppress her feelings for Gwen.
However, they're hesitant to start anything romantic due to both Courtney's current relationship status and Gwen's previous experiences with reality TV romance (and, obviously, era-typical internalised homophobia would rear it's ugly head), and mutually agree that repression is the way to go.
The two of them awkwardly dance around each other until the London challenge, wherein Duncan rejoins the show. Gwen decides to keep her distance from Courtney now that her boyfriend is in the picture, justifying it as her trying not to sabotage her friends' relationship (referring to both Courtney and Duncan, since Gwen and Duncan are friends and canon can rip that from my cold dead hands). Courtney does her best to keep her feelings for Gwen under wraps, hoping that Duncan’s proximity will overwrite them completely.
Things come to a boiling point fairly quickly as Duncan, being the no-nonsense person he is, confronts the two about their weird behaviour. They both try to play it off as nothing, but Duncan reveals that he knows about their feelings towards each other - since WT aired internationally, he'd have to be living under a rock to miss news that big - and he's fine with it. After all, he spent the majority of his time with Courtney during Island helping her find some sense of identity outside of her parent's expectations, and he'll continue encouraging her to explore what she wants... mostly because he's hoping that, with her focus on Gwen, she'll chill out a little when it comes to the impossible standards she holds him to.
Plus, he and Gwen are cool. He can live with her being his girlfriend's girlfriend if she can deal with him being her girlfriend's boyfriend. They could try out being a throuple, but I really doubt Gwen and Duncan could retain anything more than passing attraction towards each other; they'd realise pretty soon they're better off as mutual friends and Courtney's partners.
