I have a theory that the cover he uploaded a while ago was actually SM testing waters. They are probably trying to determine rn whether or not the audience has warmed up to Chen enough after the "scandal" for them to let him out of the dungeon.
The cover was super well-received: over 1 million views and 100k new subscribers in just over a day, the most comments and likes out of any video on his channel, him trending everywhere, positive coverage in kpop-related media, etc. It was obvious that fans, both Korean and international, are starved for content and willing to support just about anything Chen puts out. If SM got that message (which I think they did), they have no reason not to continue promoting him, solo or as an EXO member.