While typically I would agree with all of this there is one problem with your justifications. You are trying to rationalize the actions of a pure narcissist. I do not necessarily mean that in a bad way, but it is what it is.
Furthermore I personally feel that if Lou had posted up saying I accept your offer to double the bet that John would have accepted. IMHO John feels like this is partly a move by Lou to take over some control of this match. Pretty good timing for it as well.
So John tries to up the bet 200%, and Lou tries to up the bet 25%, but Lou is the one with a move/attempting to high roll? I don't see how anyone could see it that way. I mean it's possible they were both moves, but one of them is very questionable at best, and one of them is much more obvious, blatant and undeniable.
Personally I don't think John ever intended to put more than 10k actual money in play with Lou no matter how Lou responded (and he was probably reallllly hoping the first 10k offer didn't get accepted either for that matter). The 20k offer was an attempt to high roll and get in Lou's head, nothing more. If John really wanted to bet 20k, when Lou said he would do 25k John would have said no thanks to the additional, but I'll take the 20k of it that I was asking for. But John never really actually wanted that action to begin with. His offer had a totally different purpose, but it back fired on him.