I'm not sure I totally agree with the reason Jack didn't "retcon Ianto back to primary school." You just said that he blames himself for things getting out of hand, which I agree with, but it seems an over simplification for such a complex character. That was truly the scene where you could see both empathy and a deep passion (when I say passion I don't mean the physical kind, they obviously had had that much earlier on even without the sex. That scene in Fragments alone has so much subtext and passion in it it's insane!) for Ianto. It's pivotal turning point in both their relationship and Jack's character. It shows the reckless, put everything on the line for something that could be love, and empathetic nature of Jaack which the viewer, and Ianto had only heard about. This escalates their relationship even had Jack not begun to take an active interest in the team's lives because it shows he's more human than they had originally thought (except for maybe Gwen and her little Hufflepuff-y self), than Ianto had thought. You have to imagine that through the twisted emotions in Ianto about their relationship, at one point anger had to come into play. He felt deeply guilty and caged in, as you've said, and given Ianto's nature I can only imagine that as Lisa's condition stayed the same and Jack not being the salvation he expected he probably began to despise Jack. That is evident in the "clean up your shit" speech. And by bashing Jack's character internally as he emotions towards Jack became stronger so he could always tell himself as subconciously he was "falling in love" (I hate that because it seems so over used but that's what was happening) that it was still just "for Lisa." He expected Jack to kill him or retcon him especially after he killed Lisa in the pizza girl's body without a second thought, he wanted it so he could be vindicated about Jack. Him being only on suspension and allowed back surprised him probably more than it did the viewers.

A bit rambly myself! Oh and there's a song by The Spill Canvas called "The Truth" that goes along perfectly with this post.