I took this to be a very straightforward phrase meaning, well, to deceive via flattery.

Lately I’ve been hearing sports commentators using the phrase differently: to say a player flattered to deceive is to say is that they proved to be not as good as they initially looked.

I thought this might just be common or garden Sports Commentator’s Viral Idiocy, and that it too would pass, but since then I’ve looked up “flatter”, and it turns out one of the meanings is to show off.

I invite comment.

I’ve looked up “flatter”, and it turns out one of the meanings is to show off.

Huh?  I think you may be misinterpreting the meaning ‘to display to advantage’ ("candlelight flatters the face"), which is irrelevant here.  I’m pretty sure it’s just common or garden Sports Commentator’s Viral Idiocy.

Well that’s alright then.

I first came across this phrase in about 1972 in a school report. Physics was about my best subject at school and I generally came in the top two or three of the class. For some reason I did rather poorly in one of the twice-yearly exams we had and my physics master’s comment was, in toto, “He flatters to deceive.” This baffled my parents as much as it did me, so I asked what he meant. He explained that it simply meant that he knew I could do far better and was recognising that this was an atypically poor performance on my part. (That actually seems to be the opposite of the sense used by the commentator referred to above.) I have come across the phrase at least once since, but I can’t remember the context. My physics master was a South African exchange teacher, if that’s relevant.

Both those usages, the sports commentators’ and the physics teacher’s, are odd.  I wonder if what’s going on is that the original phrase, “He flatters to deceive,” is both striking (so that one wants to be able to quote it) and utterly straightforward (as OP says in his post), so that it doesn’t have any obvious metaphorical/extended uses, so it gets twisted in an attempt to make clever use of it (which only baffles everyone but the user).

I agree with LH.  Both uses are odd.  Especially the physics prof.  I would have thought that it would be appropriate if the student quoted the teacher extensively and in so doing flattered the teacher while hiding the fact that the student had not really done any other substantive work.  But that doesn’t sound like what the teacher’s phrase is meant to convey.