I think she does know better and doesn't care. She IS cruel, and she knows she is, she's been very casual about it all along...much like her brother

I dont see that she's particularly cruel. She's insenstive, yes. She does NOT IMO "know better". She has the code of her class which is that infidelty does happen, that its not that bad, and that it should be kept discreet and not become a scandal.. and she's inclined, like most of her class, to blame hte women involved more than the men. She cant see why Edmund is that upset about it, other than becauase it has become a scandal and she can't see why Fanny would be so bothered either if she had married Henry and Henry had gone on iwth a discreet flirtation with Maria...