Curious: If you forbid Wyll to sign the contract again to save his father (why on Earth do you have any saying there is another matter), is the any reaction from the Duke? Because in my PT Duke Revengard acted as if Wyll signed off his soul again (he even says as much). I thought it was a bug, but is it?
This felt like a bug to me too. In fact, in my initial playthrough...
...it felt so much like a bug that I started questioning whether other aspects of Wyll's story at this point were buggy. Like him declaring himself the Blade of Avernus if you leave the choice of the dukedom up to him and don't try to influence him one way or another. I was like: "You aren't the anything of Avernus, dear. You've broken your pact with Mizora and committed yourself to defeating the evils of the Hells. If anything, you're the Blade Against Avernus." It seemed like as much as a disconnect as the Duke saying his son had put his soul on the line so the Duke could walk free. No: we got his soul back and saved you, and Mizora's seething.
I agree that it's weird that the game leaves it up to us whether Wyll breaks the contract or signs it again. I would rather it was fully his choice. That being said, it can be interpreted as him being torn between wanting to be free and not wanting to abandon his father. However, this isn't airtight. In my playthrough, we knew about the Iron Throne and the prisoners there by the time Mizora made her offer, so none of Wyll's turmoil really made a huge amount of sense. One could say "oh, our characters pretended not to know; we played along with breaking the pact and being upset, so Mizora wouldn't just vanish and kill the Duke before we could get there." But the game presented Wyll's despair at "putting himself before his father" as being genuine, and all the companions seemed to see it that way too. I don't think Wyll is the kind of person to fake his feelings like that.