How will it 'backfire?'

Establishing boundaries and standing up for something seem to be a 180 that you should implement immediately. Based on what you have said, she lost respect for you and is now seeking something she can 'respect.' {albeit in a warped and unhealthy manner}

What outcome exactly are you concerned with?

{Thanks for accepting my comment about moral compass as a comment, rather than judgement - kudos to you for that maturity)