Ok, right before Olivia dies, and your in the cafe with your friends, and irving is there reading his newspaper, he decides to get up and leave after hearing Olivia say she almost died, and changes it so that she does die. What I don't get is, if he used his own hollow pen to change it, why didn't time stop when he went to go kill Olivia? Wouldn't time have gone grey for Ethan to if Jack used it?

Because when Jack used his hollow pen before, time went grey, and if time did stop for ethan then it would have been easier to catch Jack ( just beat the game again last night ;p)