It was literally stated in that chapter that it was false rumor but Hyoun didn't bother to correct it. he let it slide because he wanted Taehyuk to be reborn as a descendant of someone who resembles him which is his sister. By not correcting it there's a higher chance that her bloodline will carry on which in fact that what made her son ascend to the throne.
If you read the chapter with correct translation that would not have caused any confusion. Those servants painted that rumour and let it spread that the son was a child of a dragon to gain support and in turn the child ascended to the throne. Hyon also said it himself. If it wasn't for that the child would probably not have made it to adulthood knowing how ugly the fight for the throne was back then.
um i just read ch 55 and 56 and he in fact did not get revenge and i think he had a baby with taeks sister.. so um the dragon is basically present time taeks great great great great grandfather..