Oh sweet fucking Christ, we're going with that idiotic Shyamalanian swerve? I always thought that was the stupidest goddamn thing...
Seriously, even assuming that Walter is willing to sell out Hellsing for immortality (which is a hell of a leap for me, considering he even had that neat little conversation with Alucard about his belief in duty)... why the hell would he then decide to pick a fight with Alucard, somebody who he knows for a fact is orders of magnitude beyond him and who he has personally seen turn beings far stronger and more skilled than he into screaming blood mist? Fuck, why would he even trust Millennium, a pack of certifiably insane Nazis who he has attacked in the past, to keep up their end of any bargain he made with them?
In order for that plot twist to happen, Walter has to be both a cowardly traitor of Starscream proportions, and far too stupid and arrogant for Alucard to not have pegged him as such and informed Integra years ago. Worse, it doesn't actually provide any meaningful contribution to the story - and while this is just my personal opinion, having Vampire Walter be a mind-controlled mockery of his younger self sent against Alucard by Millennium as a way to fuck with him would have more narrative potential. You could actually have Alucard show an emotion other "smug" or "murderface".
I was actually under the impression that Walter became immortal in order to fight and kill Alucard. Even if it was pointless. Even if the possibility of it happening was an incredibly small decimal point. He had to be the one to kill Alucard. That's actually an overall theme in Hellsing that you can see fairly often. Everyone involved in the supernatural is fucking crazy. Integra is totally fine walking towards the Major even as he's shooting at her point blank and barely cares when she gets shot in the eye. Alucard obtained immortality and desperately wants to be killed. Seras is an absolute berserker when she really gets into it. Anderson doesn't even view himself as an actual person and Maxwell is an egomaniacal shithead. And Millennium speaks for itself.
But the creme of the crop has to be Walter. Poor, fanatical, bug-fuck nuts Walter. He serves the Hellsing family for over half a century, murdering motherfuckers absolutely wantonly with no care or regard for his own limitations as a human. But there will always be that divide. That point where he can murder just about any opponent, but Alucard, fuck-mothering Alucard, remains aloof and impossible to defeat. He gets locked away for decades, and Walter tries to forget. He can take care of the family and rest comfortably at the top of his fame and accomplishments. But then it starts to nag at him, the reminder of the monster he could never beat, even as he drifts into retirement. And conquered by his insatiable need to win, to be better than Alucard, he stays the course and plots with Millennium to awakent he vampire. Because Alucard's existence, even when under lock and key, hounds Walter like a personal failure. Alucard can go out and slaughter vampires, but not Walter. Alucard can take a bullet to the face like it was a gnat and not break stride. Alucard, Alucard, Alucard.
Alucard makes Walter feel, for all the blood he shed and titles he earned, like a human. And for someone who calls himself the Angel of Death, being sidelined is unacceptable. That's why I think Walter isn't stupid, or arrogant, or cowardly. He's just absolutely, completely, off his rocker, three cups short of a full set, insane. And he can't possibly let himself end without a fight. And he sees that in Millennium. He knows that they don't fight based on race, or fascism, but because they love to kill and destroy. And even if he's on the side of the good guys, Walter believes in that. Walter lives by that. you can see it in the way he comes alive whenever he fights. Fighting makes Walter feel alive, and more notably, important. And no fight is bigger, and no prize is bigger, than Alucard.
"We are the evening's entertainment. And I... just wanted to do something with my time on the stage worthy of applause."
-Walter C. Dornez
And that's why I think Walter's betrayal is perfectly in-character.