Probably not as horrible as you think, but definitely not problem-free. A massive part of why Lynn is with Alec in the first place is because he's a bad person. She's not surprised he committed yet another sexual crime. Because she's not in love with him the way she was with Cy and their relationship is a lot more casual, the emotional impact his actions have on her is a lot less, and easier to dismiss. It also helps that she knows that Isabelle isn't in Alec's life anymore and that Lynn is disinterested in punishing Alec after the fact.

Still, Lynn would be disappointed in herself for once again feeling this attraction towards an awful man, even if she does ultimately continue the relationship because she can't find a reason to stop more powerful than her own horniness. I could see it being something that comes up in her mind during her spates of self-loathing.

Alec would be more unsettled and upset by Lynn finding out. He treasures his memories of being with Isabelle and would find exposure both violating and a relief. Although he's glad Lynn takes it...relatively well so he doesn't have to kill her, he's left with a sort of rage that she knows about something so private and intimate, but also takes some comfort in someone knowing after years of secrecy.

As for how it happens, it's actually fairly likely that in all the homemade porn Alec and Lynn watch together, one day he simply forgets that he left an Isabelle tape in the VCR. Lynn would recognize Isabelle from pictures she's seen before in a family context.