I don't see Bakugou going dark. While he does go too far at times, he's been steadily getting better about controlling his insanity and finding the right thing to do. Why I think AM dying would be good for him is that he hasn't quite pieced together the consequences of the work they're getting into since it's basically been an age of peace/control for the heroes. As is, he's already been outsmarted by Deku and also knows there's another classmate who can rival him in power. So, while he does have incentive to get stronger, they're also not out to kill him like a villain would. Realistically, he's not much different than Deku, he's just let pride control his actions from an early age.
If AFO really is dying, too, then I'd say his aims have been to groom hand-boy into being the next big bad. After all, it's almost uncharacteristic of a villain to be like, "It's okay you failed, we'll just try again later." and not, like, kill/maim someone. The kid being related to AM's teacher is obviously a psychological blow to AM, but I don't think such a reveal will have that great an impact to the others. At the very least, I think it'll it lead to some power of friendship turn near the end when hand-boy does something he probably shouldn't have in his quest to spite heroes. But yeah, I do feel a time skip is coming.