Even though you defeat him once and then [since the portal is well-open to you] potentially being defeated again, by Frog fighting solo?
Well, to be fair the first time you fight him it is three on one, and he is busy summoning Lavos at the same time. It also states in the game that Lavos drains Magus's power when they fight. that is why he is easy pickings if you chose to fight him. (not to mention can't use all the snazzy attacks he used on you earlier.)

As I recall, in the original timeline he was meant to be destroyed by Lavos at the time he summoned him [which your interfering prevents].
Magus wasn't in Zeal on the original day of Lavos to be destroyed by him. And Janus was gated to 600 A.D. (less however many years it was) before Lavos showed any of his true world destroying power. So it is understandable that Magus can't get an accurate read of how strong he is.
EDIT: Oh, you mean he was destroyed by Lavos in 600 A.D when he summoned him. I don't recall hearing about that one way or the other. It would make sense that he became Lavos chow, but usually summoning Lavos has other catastrophic events accompanying it. For him to actualy summon Lavos and fight without the world noticing seems unlikely to me. More plausible was that he was gated like when you fought him, though to whereabouts unknown. (OMG, maybe he's the entity! ) Although it is entirely possible he is too strong to be pulled into a gate by Lavos when he is at full health.
This is something I've never thought about before.


It took some major sense to be slapped to him for him to realize that this was his best option
In my perspective, for Magus, teaming up with the party is a fate worse than death. However, he was denied death and so he is consigned to this fate. I don't think he actually thought the party would defeat Lavos when he joined them, though I don't suppose I can back this up.