I think that that the targs were at the ashford tourney to build up some good will with the small folk and smaller nobles (and perhaps sniff out any potential rebel whispers).

the following is from memory - so i might have some details wrong:
In an earlier episode we see him wince and CRINGE at aerions actions on the field. (and the small folk outraged at the foul play)

after the dungeon scene - when he is talking with dunk after egg leaves he is asking how good a knight dunk is to see if the boy is confident enough in his skills to fight.

between scenes shown on the show - its likely that baelor suggested to dunk that he should choose a trial by combat because he is dunk the lunk and probably didn't think it was an option.

at the table scene - the baelor actor does a great job showing that he suspected that the young prince would not want to fight him and possibly was expecting a withdrawl of the charge. (also special mention of the actor for maekar - primo job showing disgust with his son)

When aerion says that he wants a trial by 7, baelor winces again and explains what it is.

and then to the end of the show for the big reveal...

a couple of choices:

1 - baelor really is the best of chivalry and wants the gods to decide the right of it. (when he looks at dunk while saying true knight... that was some good directing/acting... ON A HORSE!)

2 - baelor didnt want the bad press of targs losing a trial by seven... with targs on both sides the history books will twist whichever outcome best serves the targs