No hints or suggestions to improve or suggest anything is wrong, just opportunistically trying to shaft him ... although I guess it depends on whether he's the kind of person who can take criticism (which we don't know).
I am still of the opinion that the OP should be figuring out how to say yes.
The Jody dilemma is likely something that can be resolved by simply communicating with everyone and figuring out what your friend wants. As someone pointed out, he's already fired. Stop the battles you're having in your imagination and talk you the gent.
The contract dilemma.. Never sign a contract that's handed to you. Take it home, get out the highlighter markers (red/yellow/green). Read though and go to work figuring out the parts to keep, toss, change. Maybe ping your attorney for a read through (1h of time usually). Change the contract to your liking and hand it back to the band.
If he's a friend, you should discuss the issue with him in the first place even beforr raising it in a forum. Just explain what happened and ask him what you should think of it. He will be able to interpret the situation better than you can.
This was a one off gig so it's unfair to take a snapshot and judge the band by it. But I will anyway. Playing 10 songs as background music does not sound like any sort of step up to me. And while I don't want to bring politics into it, if my band was ever in a position that we were asked to do a political fund raiser for a party who's politics I didn't support then I wouldn't do it......which is a whole other topic.
In my opinion if you're wanting a change and to grow then look elsewhere while still keeping your current bands going then take up the best offer somewhere down the line.