I don't think he's delusional, but… maybe he thinks he needs to atone by "saving" someone from a doll-like life. He seems to have concluded that if Dowoon and he had continued to be friends, none of that would have happened, and part of the problem was that Dowoon was pretty much brainwashed into being a pushover.
In a sense, I get where he's coming from, but beginning by beating his friends up will only alienate Yeonwoo further. People are saying Taehoon will win him over to Hobin's side, but right now I don't see this happening unless it turns out that his friends are turncoats who abandon him when it transpires he's a fighter (though being a fighter isn't the same as being a bully and thus I see no reason why they would).
I think the next chapter will end the flashback with Taehoon's wiping the floor with that gang, and then we'll see the continuation of the fight with Yeonwoo.