How is Blockstream going to recoup its 71M VC with sidechains?
There are a lot of ways they could make money off of sidechains. As one of the only companies with developers who are experienced with making sidechains, they could provide a service where they make sidechains for people. They can also make permissioned sidechains and require people who want to use said sidechain to pay them some fee.
How can they serve two masters at the same time?
In the same way that people who work at Red Hat who also contribute to the Linux Kernel. Or how TOR is partially funded by the US government and had DoD employees working on it.
Is it not obvious that they working for Blockstream and at the same time holding back on upgrading the Block size to pave the way for SegWit & LN? You cannot throttle something and then suggest a solution to make it faster,
They aren't throttling anything, and are not " holding back on upgrading the Block size to pave the way for SegWit & LN". They aren't supporting a block size increase because they think that increasing the block size as people want it to (by changing the constant) is a foolish way to increase capacity. In fact, if Blockstream did control Core, then Adam Back's 2-4-8 proposal should have been accepted without complaint, but it wasn't. Or they would have accepted Pieter Wuille's block size increase hard fork, but it wasn't.