Afraid your point wasn't clear to me. Okay, he could have continued to make money but IMO, he thought he could make more doing something else....like the Divorced Dads Club maybe. Also, think his ego was hurt when he was demoted. Really don't think the children were anything more than an excuse.
IIRC, the contract didn't prevent Jon from speaking out against TLC and doing other things in violation of his contract. Isn't that why he is being sued?
JMO = Just My Opinion
My take on Jon canceling the show is this.
He thought it would make him look like a concerned parent for the judge. And second, Kate was having a good time and getting attention and he squashed it cause he could.