I think who the baron surrounds himself with, namely the people who think they can eat reasonable men before breakfast, says more about his position of strength than any amount of decadence in dress.

And of course he wants his empire to think he is a reasonable man. If they thought he was unreasonable, blaming their problems on him would be much easier. Instead, as when he was dealing with recalcitrant cities, everyone knows that he is more in his right mind than any ruler in several hundred years. And so nobody can get together a populist revolt. There are lots of revolts by madboys and decadent nobles, but the common man, despite their grumbling about the Baron, prefers him to all the other options.

Quite simply, the knights' plan was the only way to change rulership in the Empire, and it mostly would have worked because Gil was starting to develop a reputation as a furniture chewer. Once Gil came out of hiding, I doubt even the Heterodyne fairy tale could have saved the Knights' plan.