"He cannot see how his affection for her has compromised his judgment and values and caused him to do wrong by his sister."

True. In reference to some of the other posts in this thread, is there a difference between ignoring one's principles/values and not applying them?

James' behavior in this scene is quite wrong: encouraging his sister to break a prior engagement, condoning lying to get out of said engagement, silent agreement to Thorpe's lie to Miss Tilney, anger at Catherine for standing on principle. James has fallen in with unprincipled friends and his head is turned by beautiful Isabella. He's sliding down the slippery slope of allowing his desires to compromise his values. It appears to me that James has become confused as to what is right and what is wrong.

Compare this argument about prior engagements with General Tilney later in the chapter:

After sitting with them a quarter of an hour, she rose to take leave, and was then most agreeably surprised by General Tilney’s asking her if she would do his daughter the honour of dining and spending the rest of the day with her. Miss Tilney added her own wishes. Catherine was greatly obliged; but it was quite out of her power. Mr. and Mrs. Allen would expect her back every moment. The general declared he could say no more; the claims of Mr. and Mrs. Allen were not to be superseded; but on some other day he trusted, when longer notice could be given, they would not refuse to spare her to her friend.

The general acquiesces to C's responsibilities to her chaperons. On her way to the Tilney's [Catherine] had attended to what was due to others, and General Tilney is now doing the same. Catherine's behavior and values are further affirmed by Mr. Allen: "These schemes are not at all the thing. .... It is not right; and I wonder Mrs. Thorpe should allow it. .... As far as it has gone hitherto, there is no harm done,” said Mr. Allen; “and I would only advise you, my dear, not to go out with Mr. Thorpe any more.”