Yes, I think Dan thought Crystal and Lonnie would wind up hurt because he saw how Ed was as a father and husband growing up. Also, the age difference was an icky factor partially because Ed knew Crystal when she was a child. So that is kind of weird...
I don't think Dan didn't want his father to be happy.
I think it was because he knew that Crystal had already had several disastrous relationships and she wouldn't fare any better with Ed. As ilovejnames said, Dan knew what kind of husband and father Ed had been and he didn't want Crystal and Lonnie to go through what he and his mother had. Oh yes, and the heebie-jeebies that come with thinking about how Ed has known Crystal since she was a child.
He knew his father, his father ran out on his mom and badmouthed her all the time, he was never there for her, he knew Crystal, she was his friend, he cared about her, he knew it was a disaster from the get-go, which Crystal found out later when she was knocked up and alone all the time.
Dan's mother...wasn't she played by Debbie Reynolds in later seasons? They had a different actress play her in one of the earlier season's Thanksgiving episode.
right, Dan's mother was a character actress in the first Thanksgiving ep, and then played by Debbie in the penultimate ep (written by her daughter Carrie Fisher). Those were the only to eps we sw her, despite the "Lies My Father Told Me" 2ptr that discussed her mental breakdown (and should have gotten John an Emmy! glares at Fraser.....) and was a topic of discussion in s9 to explain Dan's absence (aka John locked into movie roles like Fallen).