I feel like I saw a post from you a little while back comparing Jonny to Ass Kickers, and saying that you know the joke is there’s no heterosexual explanation for Johnny, but actually it’s a very “Dennis” thing for him to do, and may have truly been about Dennis wanting Mac out of the house. Kind of going off that, and not to sound like a Reddit bro, but I wonder if that means there’s also a heterosexual explanation for the SINNED system? Since they’re revealed in the same episode, it’s not far fetched to imagine Dennis used the SINNED system to seduce Mac as Johnny. That would explain the anal beads as Dennis’ solution to keeping the “Engage Physically” step while still remaining anonymous and remote. Don’t get me wrong, I fully believe that Dennis is bisexual, I’m just wondering if the SINNED system is not hard evidence of that at this point, since the only time we see it used by him in canon is for ulterior, supposedly non-sexual and non-romantic purposes.
And following that, why do you think Dennis was so upset that Mac fell in love with Johnny, if that shows the system was working properly? Was he hoping Mac would see through it? Why??
Right, okay, so, regarding the way he explains things within the episode, as I said, he's not lying about any of that. I don't believe he's hiding/in denial about some latent romantic/sexual feelings toward Mac, or that he's trying to avoid acknowledging these because he believes he's Straight or anything. There are a couple caveats and omissions, though.
I'm actually working on a bigger essay about Dennis' systems, so I don't want to get too far into it, but I just want to quickly say that the SINNED system being based around Barbara is significant, just not in the usual macdennis reading re: Mac being obsessed with her and Dennis intentionally trying to replicate this. I do not think Dennis has been using the system on Mac, and I don't think it was developed with him in mind. Dennis has his own mommy issues and grew up with her doing this shit. His explanation he gives during the last step is obviously the way she treated him. Not Mac.
The SINNED system's explicit, stated purpose is attracting a man, and the way he talks about it – more specifically the way he talks about men and their behaviours, then him straight up calling himself "mommy" (while controlling Frank, mind you) – as well as his shushing when Mac and Dee ask why he has this system, all point to him having created it for himself. And he has been using it; that's why he knows it works. If he had used it solely on Mac, rather than other men, he would not know that. The system's intent is to secure a second date with a stranger; he plainly doesn't want to and wouldn't have to do this to Mac. On the other hand, Mac's behaviour toward Johnny is entirely unexpected in the script, and even in the episode it's obviously not going as he intended, so if this was his confirmation the system worked, it's not really confirmation at all. If he intentionally stopped at the second last step, he wouldn't be anywhere near that confident with "Do you need a tissue", which is the pièce de résistance of the whole system and the part he relies on most (that Dee and Mac are surprised ACTUALLY works). "Engage physically" also works differently and serves a different purpose within SINNED.
We also, of course, have Glenn saying Dennis has the system because he's "covering all his bases". So I don't think there's any question that SINNED is a relatively straightforward and thoroughly tested counterpart to DENNIS, albeit with several alterations that make it seem more sincere and more suited to dating men, ("anybody can get a guy to bang them once"). Basically, no, there's no heterosexual explanation there, and unlike with DENNIS, I don't see any ulterior motives with what this could provide for Dennis. He doesn't hate men, and he doesn't want to to win some kind of war on women by torturing them. The literal only other explanation available is the same one we see in the pilot.
But this is a completely different character to the Dennis we have now; he doesn't want shallow praise, it's something he's actively sick of from Mac, and at a certain point, regardless of his reasoning for doing so, he's still dating men with this system.
I've seen several people claim that he is teaching Mac to use SINNED on him, but that's disproven by the script and frankly makes no sense if you know anything about Dennis at all. I would say that while there may be a few coincidental alignments (both for Dennis using it on Mac and vice versa), it really just comes down to being because Dennis is the one who came up with it.
Moving on; Johnny's role is to occupy Mac's time and placate him sexually. Dennis has been using this fake boyfriend to get Mac to give him space, to get him out of the apartment, when he's irritating Dennis. I mentioned Ass Kickers in the original post, but you can also see something similar in Sweet Dee Gets Audited too. When he learns this from Frank.
Where it gets slightly more complicated is why I believe it's sexual, beyond just the fact that it's most likely just easier to catfish and maintain Mac's interest that way, versus a no-show platonic Friend.
Mac will already do things for Dennis if he asks. The difference is that he does it with some amount of expectation that if he does enough to win Dennis' favour, he'll eventually give in and "love" him back, and Dennis doesn't want to give into that. Sex is already transactional for Dennis, and he doesn't want it to be that way with Mac. That's also why he makes this comment in Prime Time. He preferred when (he thought) his and Mac's relationship was based on an equal give and take, something unique to them compared to the majority of Dennis' other relationships, especially with women, and not something the SINNED system attempts to establish with other men, either. By creating Johnny, he redirects Mac's efforts elsewhere, and the two of them can actually have a platonic, yet still semi-exclusive domestic partnership that is kept separate from Mac's sexual advances. His relationship with Mac is Something Else, and he likes to keep it that way. You can think of it as a safety buffer for him.
Mac and Dennis used to sleep in the same bed, they used to be close, they used to be physically intimate, and they used to trust each other implicitly. The thing that puts an end to this is Mac being underhanded with his plans in Dennis' Double Life, trying to force Dennis into a fake relationship, and more specifically trying to force Dennis to sleep with him.
Now, without Mac making advances toward him, Dennis is agreeing to sleep together with Mac while he's "taken" by Johnny. Keep in mind that Inflates was always the first episode, and Frank vs. Russia was meant to be the second episode in terms of both initial writing and airing order. These two episodes were always meant to be back to back, and it stayed that way up until the last minute; they were announced together, and then things were shuffled around.
To address the other half of your final point, the issue isn't that Mac "fell in love" with Johnny, it's that Mac is insisting he loves Johnny when he doesn't even know him.
Dennis knows that Mac doesn't love Johnny because Mac doesn't really love Dennis. Mac's concept of "love" is an obsessive need to earn back someone else's love for him by eagerly performing favours that often backfire and are done without the other person's request. He does this with his parents, too. The more they push him away, the more he tries to earn that love, repeatedly insisting that the open, honest hatred and annoyance must mean something else. Mac's reaction to his uncle Donald is what happens when someone attempts to connect with him (he's entirely disinterested). In trying to have Johnny pull away and ghost Mac, Dennis ends up in the same position he himself is in with him. Evidently to his complete surprise, he sparked this obsession in Mac.
Dennis was hoping he would see through Johnny, because it would have been his confirmation that Mac knew him well enough to catch him. We see that Mac's reaction to being told outright is denial, but I don't think Dennis anticipated this, so his reasoning for trying to get Mac to understand that he was Johnny is unrelated to this. He says he dropped so many hints, trying to clue him in to the fact that it was him. In the end, it's just further confirmation that Mac's "love" doesn't actually extend to Dennis as a person. Mac doesn't know Dennis.
And this is all he wants. This is Dennis' concept of "love". To be seen, known, and understood.