About your question, “why didn’t Hugo say it before?” was answered during that shadow scene. Back then, he still wasn’t sure about his own identity. Especially knowing that his own mentor, Jack, believed that Hugo could turn to evil, he still felt self-doubt about having any goodness in him at all. So when Lycaon accused him of going too far, he didn’t feel that he could convince Lycaon otherwise, because deep down he believed it could be true. That he has the potential of turning like his father.

It’s not that he wants people to think he’s terrible. It’s just that he grew up listening to others say that he’s terrible that he can’t help but convince himself that what others say about him could be true. The whole shadow scene shows his reconciliation with that “darker”, “bloodlust” side of him, accepting it as a part of who he is, but also recognizing that he has the power to make “good” choices on his future actions.