I brought this old thread back up, because I had a similar discussion about Matty Groves with Mr Finn and the Laprelles at the Getaway. Anyway, here's my theory on the whole thing:

Yes, Lord Arnel was a wealthy man who was much older than his Lady. She was attractive, unsatisfied, and bored. The Lord was a big brawling lug, fond of hunting, fighting, feasting, and used to having his way with the girls of the village. She was kept safely within the castle walls. The other lords who saw her would be smitten, but too afraid of Lord Arnel to attempt any hanky panky. Even the male servants were aware of the Lady, her beauty, and he warm temperament.
This feeling extended to none other than Lord Arnel's page, who would have had as much intimacy with her as any other male would have been allowed, he having Arnel's full trust. Could it be that the two traded longing looks, that she extended subtle invitations which the page was far too cautious to follow up? Or was he a homely weasel who only pined for a woman who was unattainable to him?
For whatever reason, her eye fixed on Matty, a fellow below her station, but perhaps a village romeo. At any rate, it seems certain that the seduction at Church was the end result of a long mutual admiration. Unlike the page, Matty had the boldness of love and passion to overcome his fear of Lord Arnel. He was not a shy and weak fellow, in my opinion, but a youth of the Lady's age bold, and perhaps dumb enough to make love to her in the Lord's own bed.
And who would be most likely to be aware of such an assignation? Whose stewing unrequited love would be most likely to turn to vengeance when he learned of it? Why, the page.
This was his motivation in going to Lord Arnel, not any sense of loyalty. He wanted Matty killed for doing what he had not the courage to do. Did he bargain for the Lord 's killing his Lady as well? Probably not. For he could not envision that she would have the boldness to tell Arnel that she would rather have Mattie than her husband. This would be a courageous stand that the weaselly page could not predict.
And so, Lord Arnel, cruel but fair, offers Mattie the better sword and slays him in an exchange of blows. Her statement provokes him to kill her in a tempest of anger, an action which I am sure he would later regret.

Anyway, that's my theory, and I'm sticking to it.