Victor Vallakovich's Experiments

Victor discovered some years ago that he had the ability to perform magic. To test his magic, he experimented on servants and dead cats within his parent's attic. When he was arranged to be with Stella Watcher, he saw an opprotunity to test his magic even further.

Victor's Experiments on Stella

At first, Victor does not experiment on Stella, he simply views her as annoying company. However, after a few days pasted, Victor snapped at Stella, casting Fear on her. She lay cowering in a corner of his attic for the next minute. Afterwards, Victor realizes he blew his magic cover and uses Modify Memory on Stella to erase her experience of having Fear cast on her.
The next day, Stella approahces Victor and apologizes for "her outburst". Victor realizes that he only removed her memory of the spell being cast, not the emotion of fear. Therefore, Stella assumed she had a panic attack or triggered Victor in some way.

Beginning Experimentation

Emboldened by his success on her the day before, Victor sets about trying out mind-effecting magic on her. Confident that he can just edit her memory later. A few examples of experiments he may have conducted
Repeat tests with Fear, while erasing the trigger.
Cast Phantasmal Force on her in secret, haunting her with visions and sounds only she can perceive.
Suggestion to get her to do all sorts of things, and to plant the idea in her head that she needs to keep coming back.
Eventually, he tests out Dominate Person on her, and exults in the power he has over a person. However, he knew that casting that spell would prevent him from Modifying her memory the next day, so he forced her to do things that it would be easy to Suggest that she not tell anyone about because she would already be embarrassed. Naturally, you can adjust the specifics to the nature of the group you are running....ranging from just something embarrassing (such as her first foray into acting like a cat) to truly abusive. The next morning, he edits the events while she was under Dominate Person out of her memory...leaving her with the memory of deep embarrassment over something she couldn't tell anyone about...with no memory of what that thing was.
Continue in this vein...perhaps if, at some point, she stops coming...he uses Dream to terrorize her in her sleep. She's a useful test subject now, he can't have her running off.
And Fiona Wachter, power-hungry old witch that she is, is too focused on the apparent progress she's making of getting a foothold into the Baron's house to notice/care that her daughter is becoming erratic, confused, and terrified.

Stella's Breakdown

Eventually (probably only takes a few weeks), Victor comes to the realization that Stella is a distraction. Yeah, he's been having fun playing with his magic and, through it, controlling and terrorizing her while bending her brain around enough that she keeps coming back...but he's supposed to be working on a way out of Barovia. But she's also been a good test subject, and he enjoys messing with her with his magic...it's good stress relief.
But she's still kinda annoying, especially with how weird she's started acting. So he starts using his magic to force her to hang out with his skeletal cats. Then decides she might be less annoying if she was acting like a cat, too. He notices that she's becoming more receptive to his Suggestion spells (her degrading mental state is making more and more things seem 'reasonable.'). Before long, she is slipping into her 'role' as the 'Little Kitty' without magic at all.

Stella's Collapse

One day, Stella doesn't come back 'out of character.' He has to use magic to get her to 'act normal' in order to make her go home. The next morning, she wakes back up 'in character.' And didn't come back out of it.
The story about the 'cruel words' was invented by Victor who used magic to persuade people that the two of them had a number of fights, he'd said some things "he regretted," and, the prior night after a really bad argument, she'd become completely irrational and ran off.

Outsider Perspective

To people familiar with the two families, they would likely be aware that Stella Wachter's condition was degrading over time. And most of the town would be aware that she'd had a few 'fits' in public (the result of spells like Confusion or Phantasmal Force being used on her, with Victor hiding). This could polarize opinions of some NPCs against Lady Wachter, who kept sending her daughter to see the Vallakovich boy, when she was obviously suffering.

Helping Stella

This take on things offers an alternative option for helping Stella. She is on the receiving end of numerous alterations to her memory. Remove Curse can break those alterations. The shock of having those memories poured back into her head may be able to snap her back into something resembling sanity (likely led by an abundance of sobbing, and possibly a bit of screaming as well). She'd perhaps retain some cat-like mannerisms, and be utterly terrified of Victor, but she'd be sane enough to be communicative.