The Duke comes forward and says that he would like to speak with Isabella. First he takes Claudio aside and tells him that he has overheard their conversation, and that he knows Angelo well. He tells him that Angelo was not actually propositioning Isabella, but only testing her virtue. He was pleased with her response, but he would have killed Claudio either way. Claudio asks to forgive his sister, and the Duke sends him to do so.
The Duke asks the Provost if he can be alone with Isabella, saying that he is honorable because of his profession. The Duke tells Isabella that she is good and asks how she plans to convince Angelo to save her brother. She tells him that she would rather her brother die lawfully than give birth to an illegitimate child. The Duke says that Angelo was only testing her, and that he has a plan which will save Claudio without tarnishing her honor.
The Duke asks her if she has heard of Mariana, and Isabella says she knows the name. The Duke claims that Mariana was engaged to Angelo, but that he broke off the engagement when her dowry was lost in a shipwreck. The Duke's plan is for Isabella to tell Angelo she will agree to his request, but to send Mariana in her place. Angelo will be forced to marry Mariana, having had sexual relations with her, and Claudio will be freed.Read a translation of Act III, Scene i →
Isabella has no real reason to tell Claudio about Angelo's proposition if she has truly made up her mind. She either seeks approval from him, or she is unsure and wants to be convinced that she is wrong. Considering Claudio's reaction and Isabella's response, it seems that the former is more likely; her mind is set, but she wants his approval for her decision. She is reassured when he seems to agree, but she clearly does not have enough faith in him to think that he would agree with her no matter what. If that were the case, she could simply have stated the proposition immediately, knowing that he would agree with her. However, she sidles around it, first ensuring that they agree on moral grounds and then mentioning the specific circumstance.
Isabella should not be too surprised by his reaction, given that he obviously considers fornication to be less of a sin than she does, having committed it himself. He begins to look upon her as a selfish, naive figure as he tries to convince her to sacrifice virtue for the sake of pragmatism. However, he does realize the repulsiveness of the suggestion and feels ashamed for having tried to convince her otherwise.
Isabella's response to Claudio's willingness to let her accept the proposition is to criticize the act of sexual intercourse itself. She says, "Heaven shield my mother played my father fair" (III.i.141), suggesting that there was some sexual deviance in their own parents' relationship which caused him to become so cowardly and given to sinful behavior. At this point, Isabella wavers between virtue and foolishness. The play is sexually explicit in its plot and language, and Isabella emerges as a frigid, prudish figure for her willingness to sacrifice her brother's life to save her own honor. She will not be a martyr for him, and he does not wish to become a martyr for her.