Dubas is young and has time on his side.
He's practicing game theory to a "t". One key negotiating tactic is to be prepared to walk away rather than accept compromises you aren't prepared to make. He's done that, leaving the Leafs in a difficult position.
If MLSE wants him to stay on board with conditions, the spiel about his family might be a guise to conceal his real position which could be that he's not prepared to accept being told what to do -- whether that's firing the coach or trading players etc. If so, I agree with that position, regardless of whether I would agree with the actual decisions he would make.
The thing is, if he's the decision-maker then he's got to live and die by his own decisions. Failing to do so was the downfall of so many others such as Gord Stellick who likely caved to Ballard and Brophy in trading Courtnall for Kordic, etc. Once you give up decisional authority, you're no longer the manager but just a puppet and you've lost control.
If Dubas doesn't stay on with the Leafs, he will have another chance elsewhere and his day will come. He would be wise to do that on his own terms.
If they go separate ways, then I would have more confidence that Kyle Dubas will win a Stanley Cup before the Toronto Maple Leafs than the other way around.
This could be a replay of Alex Anthopolous and the Toronto Blue Jays. He left the organization rather than be told what to do.