That may be true, but personally, I think Ralph's ego is waaaay too fragile to agree to something like that beforehand. It seemed to me that Ralph was seething so hard that his jaw was clinched tighter than a hydraulic press, because once he realized what was happening, he knew it was too late to stop it. If he cut Nick's mic after everyone recognized what song was being played, it would've made him look even worse, because it would essentially be him admitting that this shit is starting to get to him. His only option was to try to remain stone faced, and pretend to be in on the joke.
I thought it was a genius troll on Rekieta's part (and in fact, I finally registered an account after years of lurking, specifically to share my theory on why he did it). Rekieta is obviously tired of people pestering him to disavow Ethan Ralph, but I'm sure part of him actually does want to cut Ralph out of his life and just be done with him. What you have to understand is that Nick is a bit of a contrarian, so he doesn't want to do it in a way that would be considered a "win" for the autistic kiwis who are "moralizing" about his connection to Ralph.
What he did was the same sort of cunning, conniving manipulation that women use when they want to breakup with a guy, but they don't have the courageānor the convictionāto make a clean break. Instead, what they'll do is openly cuck a guy until he breaks up with her. They usually don't go to the cucking right away. How it typically starts is, she will seem maybe a bit too receptive when a guy hits on her (most guys will let their girl get away with this at least once... she's just "enjoying a compliment," after all... it's easy for her to pass this off as being completely innocent); then it will escalate to her openly flirting with other men (this is more difficult to claim as being innocent, but flirting can be done in such a way to allow for plausible deniability... "I was just being polite, why are you overreacting?!" The whole point of this exercise is to make you out to be the bad guy, while simultaneously destroying your ego); after that, the next logical step is for her to start an emotional relationship with a guy that involves some form of regular communication (texting, email, facebook, etc.). If a guy is too much of a beta simp pussy cuck faggot to tell the bitch to pound sand by this point, that's when the genuine cucking starts.
Nick skipped the whole "escalation" part. His opening salvo was to go straight to the thermonuclear attack. What Nick did was the metaphorical equivalent of your young, beautiful bride getting caught by the entire staff at your office Christmas party fucking the boss on your desk. The only thing you can do after something like that (other than to kill yourself, and/or go on an office shooting spree) is to completely remove that person from your life, which is exactly what she wanted in the first place (and what Rekieta wanted). At least, that's my interpretation of what happened. I thought it was glorious.