All of this is hardly Varric's fault. Cassandra would like to think Varric knows that somewhere deep down, but he probably quite honestly ignores that voice of reason within himself and that's why he stays.

"Which leads me to wonder why it is you're here."

The real reason, at any rate. Sure, the Inquisition is willing to provide Isabela with compensation. (Possibly more compensation than she's worth, if you ask Cassandra, but it wasn't her call to make.) But plenty would have looked the other way. When the Inquisition calls upon you, they ask a great deal. Someone as self-serving as Isabela claims to be would surely believe nothing to be worth this great a risk.