Lady Russell sees nothing suspicious about Mr. Elliot's reconciliation with Sir Walter's branch of the family, despite Anne's misgivings. She does seem inclined to believe that Mr. Elliot is not particularly interested in Elizabeth, a point which Anne is not yet willing to concede.
Mr. Elliot, we learn, has far greater interest in the titles that are so important to Anne's frivolous father, and he - like Sir Walter, Elizabeth and Mrs. Clay - are quite taken with the news that the Dowager Viscountess Dalrymple and her daughter are in town. A few points here:
1. The title is pronounced VI-countess, with a long I and a silent S.
2. The title of "dowager viscountess" informs us that the title was hers by marriage to the Count, who must now be dead in order for her to be a dowager. The title of Viscount Dalrymple would have passed to her son or to her nearest male heir, and that man's wife would now have the title "Viscountess Dalrymple". A dowager could in many cases be quite formidable, but in other cases could end up in near penury.
3. A word about the use of the names Elliot and Dalrymple in such close proximity, and why it would have been especially hilarious to people who first read the book in the early 19th century: One of the most celebrated courtesans of the Regency era was Grace Dalrymple Elliot. (For an account of her life, I recommend My Lady Scandalous: The Amazing Life and Outrageous Times of Grace Dalrymple Elliot, Royal Courtesan by Jo Manning.) She was a divorcee who had a lengthy affair with Lord Cholmendeley, and gave birth to a daughter (Georgianna) who was widely believed to be the child of the Prince Regent. Austen and her contemporary readers would have been familiar with the scandal of Dalrymple's marriage and divorce. Grace Dalrymple's husband, Dr. Eliot, was a short, unattractive man with a poor complexion, in part based on a life at sea; I contend that Austen chose to give Sir Walter a severe aversion for all of those traits, thereby providing additional comic fodder to her readership. In addition, Jane Austen chose to make the female Dalrymple in her novel a Dowager Viscountess, with a daughter, the Honourable Miss Carteret. Imagine, therefore, how much funnier this line must have been to Austen's first readers: "for the Dalrymples (in Anne's opinion, most unfortunately) were cousins of the Elliots; and the agony was, how to introduce themselves properly."
Anne finds herself in the singular position of learning that her father and sister are complete sycophants toward actual nobility, and are constantly discussing the Dalrymples, who turn out to be unexceptional women that Anne cannot admire.
Lady Russell confessed she had expected something better; but yet "it was an acquaintance worth having;" and when Anne ventured to speak her opinion of them to Mr. Elliot, he agreed to their being nothing in themselves, but still maintained that, as a family connexion, as good company, as those who would collect good company around them, they had their value. Anne smiled and said,
"My idea of good company, Mr. Elliot, is the company of clever, well-informed people, who have a great deal of conversation; that is what I call good company."
"You are mistaken," said he gently, "that is not good company; that is the best. Good company requires only birth, education, and manners, and with regard to education is not very nice*."
Mr. Elliot's use of the word nice is meant to indicate particularity, meaning that "good company" is fairly indifferent about education. The remainder of Mr. Elliot's comments (following the above quote) show that he is happy to benefit from being perceived to have "superior" connections, even if the ladies themselves are not particularly diverting, with a digression at the end of the chapter indicating that one of the reasons he likes seeing Sir Walter spending so much time and attention on the Dalrymples is that it diverts his attention from "those who are beneath him", clearly indicating to Anne that he is concerned about Sir Walter's relationship with Mrs. Clay.
A reminder: Mr. Elliot is to inherit Kellynch when Sir Walter dies because Sir Walter has no sons of his own. Mrs. Clay, being young enough to still bear children, could produce an heir who would displace Mr. Elliot in the line of inheritance, were Sir Walter to marry her. Mr. Elliot really, truly doesn't want Sir Walter to remarry and beget a male heir. He is couching it in terms that seem to indicate concern for Sir Walter's social standing, but as you read on, ask yourself whether that is truly Mr. Elliot's motivation here.