I think he felt deep down that she really wanted a wedding. She was sacrificing the wedding to do a quick marriage for Toby. Toby's mom would not approve of Kate being pregnant without being married. Toby knew his mom would be disappointed so Kate offered to go get married so when they told his mom about the baby, they would be a married couple, and not just two people living in sin having a baby out of wedlock.
He knew Kate was "all talk" when she was saying, "oh good, I won't have to go dress shopping," and "It's soooo better this way, think of the money we will save." Toby knows her well enough to know that she was doing this for him and to please his mother. So he proposed so that they could do it the traditional way. Plan a wedding and have family and friends join them etc. Instead of rushing to the court house and doing a quickie wedding to appease his mother. I think they both showed how much they love each other and are wiling to sacrifice their own happiness for the other one.