When he started he obviously was riding the wave and enjoying the fame for all its worth. He often bragged about how famous he was and how much he was making. IIRC he even used his wealth as a way to dismiss Gravy's devastating debunkings.
At one point, around Memorial day several years ago he started to realize he had made himself the leader of a very, very crazy cult. He bitched about someone claiming the rights on footage in LC that he had used without permission and before he knew those people were being attacked and threatened. He had to make pleas for everyone to stop. Mind you I don't think he cared if the other people suffered, I suspect someone pointed out to him that he could be facing racketeering charges or worse if the antics kept up.
You can kind of see at the point where the bloom had come off the rose for him. He started snapping at people on his message board, complaining about why the debunkers wouldn't leave his lies alone, and tried more than ever to get the recognition of celebrities so he could avoid the hoi poloi. His sheer motionlessness at the debate with Gravy speaks volumes.
The fact that he blew so much money on the Final Cut version of the movie shows he just had no business sense. Watering down his claims alienated his cult and everything else made the movie boring. I can remember full debunkings of each version of LC being on the web, while I think most critical thinkers just looked at LCFC and said"eh, why bother".
Dylan reminds me a lot of young rock/rap stars who get huge advances from the labels and promptly blow it all on useless crap, not realizing that money has to be paid back with record sales.
Every time I think maybe I should feel some sympathy I recall his jerkoff antics he pulled even when he was trying to 'move on' : comparing himself to Rosa Parks, comparing himself to Winston Churchhill, his long-time .sig picture of Gravy punching himself, his attempts to suck up to celebrities, the lies he told directly to the face of victims families, his mocking of boxcutters as a weapon, his accusation that someone sacrificed their child for 911, etc. etc.