I still think it would have been better for the clan to gouge maximum compensation out of the Lan sect and accept the cancellation. Maybe it would have been shameful, but every day more and more people know Xiao Yan is a powerless loser. If he had become the husband of the future matriarch of the Lan sect, he would have been nothing but a despised doormat of a husband. How can anyone say that wouldn't be shameful? And it would have continued to be shameful for as long as he lived. If their kids hadn't been talented, it would have been called to be his fault alone. However, if they had accept the marriage cancellation, it would have been a single incident. Maybe folks would have talked about it for a while, but eventually nobody would have bothered anymore, moving on to new juicy rumours, as everybody knew anyway Xiao Yan wasn't worthy, so there wouldn't have been anything mysterious about the cancellation.
That kind of stubborness is what collapses dynasties.