Your scenario makes the most sense.
So let’s pretend we are talking about Clinton as President.
Clinton says to Special Counsel that she has the goods on him and that he better play ball in a blackmail attempt. He better PRETEND in a secret alliance with her that he is investigating her and her campaign but he is to really to go after the Republicans under the Special Counsel law and mandate given by Deputy AG that PRETENDS the investigation in about her. Deputy AG may or may not be in on said SECRET ALLIANCE
Do you really think that is legal?
She is capable of doing such a thing. It would not be legal.
If within the scope of the mandate SC found a republican laundering money with her Campaign Manager then SP could go after said Republican if within the scope of the mandate given by AG.