All three have their reasons for keeping up the charade: Colin because it's the only way he can get attention and power; Dr Craven because it means that he can still dream of an inheritance; and Mr Craven because - well, because of his attack of the Münchies, perhaps, which has its own roots in grief, self-hatred, morbid obsession, etc etc.

For that reason I wouldn't classify it as Münchausen by proxy, first because it's a state of affairs that Colin actively perpetuates until he has a better reason not to, and secondly because it's not as though Archibald is devastated to come home to a tall race-winner who almost knocks him off his feet; it's just been easier for him all these years to have a child he never has to see, because then he doesn't have to deal with any of the fucked-up etc. (and it may be easier for him to believe in an incurable invalid, because then if the boy does die, like his mother, at least it's a blow Archibald has been preparing himself for).