Although Quentin values chivalery and the old honor code, how would his invention of the incest story help restore Caddy's honor?
I believe that this is his attempt to shield his sister but I can't find any text evidence to verify this. Also is incest really better than promiscuity?
Quentin sees incest as a better option than promiscity for a few reasons.
First, incest implies that it was not entirely Caddy's fault and that Quentin also shares the blame. He loves his sister and, reguardless of whether you think he loves her too much, he does not want her to bear the burdon of this sin all on her own. Rather than seeing it as a sin he sees it as a way to take resonsibility for his sister.
Second, if Quentin was also part of the sin then he would also be apart of whatever punishment the sin resulted in and, most importantly, would never be seperated from Caddy.
"Because if it were just to hell; if that were all of it. Finished. If things just finished themselves. Nobody else there but her and me. If we could just have done something so dreadful that they would have fled hell except us. I have committed incest I said Father it was I"
This affirms that he would rather have gone to hell then be sepeated from his sister.