Because it's the most convenient way to remove him as an obstacle to Sage. If he's gay, then there's no chance of any kind of reconciliation between him and Sage should the issue be something which could be resolved if he's straight and if he's given the chance.
It's also possible that this could result in something of an alliance between the MC and Chad that could be useful later should the MC discover his secret and agree to keep it, and if he defended him in Ep 3.
Because she doesn't like violence and she has a good heart, which means she's got nothing against Tybalt because she's nice to everyone, even people like him.
A thug or a meathead are probably more appropriate terms for Chad because we haven't seen him act like a typical bully. He hasn't gone out of his way to harass the MC or make his life a living hell, they simply clashed over Sage once and Chad, for some reason, thought the MC sent him incriminating pictures so he lashed out at him.
Dawe fits the description of "bully" more than Chad does.