You, as the player, have much more knowledge about what really happens in the game then all the in-game characters. You know that Aiden is "seemingly untouchable from a legal recourse standpoint", but Dylan didn't know. You know that the "blackmail involves Sophia having to essentially do Aiden sexual favours", but Dylan didn't, nor he had any reason to. Yes, he acted stupid, really stupid, but he had no way to know where Aiden will take this simple task... As I see it there is no realistic way for an incest relationship with Dylan that is based only on mother-son love. Something really radical has to happen, and maybe this is the beginning of that radical situation. Yes, it made Dylan's character more manipulative yet naive and somewhat stupid, but that's the way it is - that's the way L&P envisioned Dylan. Some may like it and some may hate it, but man, you take it way too hard...Her son just got someone who is seemingly untouchable from a legal recourse standpoint to blackmail her into very likely doing increasingly more seedy and depraved all because he foolishly thought that this would somehow help her with something he totally imagine s in his own head.
He should be fucking disowned for that.
If this sort of thing happened in real life, it would be the end of the world for their relationship. No mother could possibly forgive her son for faking a blackmail with the scum of the school, especially when that blackmail involves Sophia having to essentially do Aiden sexual favours. The bond of trust and even love should be well and truly broken, and this is not something that can be forgiven and looked back on in years to come with a laugh and a smile.
As for the Don's proposal, for sure (in my opinion) there is a catch here. I believe it will unfold in the next update (there should be a scene with the Don/Don's brother in the morning).