I finally figured out who the infamous O.T. was! His name was Orrin Thrall Higgins, and it turns out his dad was the governor of New York (his one rather lackluster term falling between the considerably more notable ones of Teddy Roosevelt and Charles Evans Hughes).
After learning a bit more about O.T., I think there’s a chance that the scandalous rumors going around about him, which were causing Rachel to reconsider their friendship, may have been about the fact the O.T. had developed pulmonary tuberculosis (the dreaded “consumption” ubiquitous in tragic Victorian literature).
O.T. had to withdraw from Yale in 1900 because of this, and Rachel’s letters about the subject date from 1898.
Rachel’s mother was a bit of a hypochondriac, something which was somewhat justified being that she lost her seven year old daughter (Rachel’s younger sister Mary) to diphtheria in 1890. So her not wanting Rachel around someone with a contagious disease would be understandable.
Then again, O.T. also ending up marrying a southern divorcee in 1902 (I’m honestly not sure which one of those two things would have been more scandalous for the son of a New York politician), so he obviously had a rebellious streak and the rumors could have been about something else entirely.
O.T. eventually moved to California for his health (moving to a hot, dry climate was a common “treatment” for TB in the early 20th century) and built a pretty nice house there.
I’m guessing the giant dragon sculpture was probably added later.
Edit: I just found a single letter from O.T. to Jack dated January 19, 1900 (I’m going in roughly chronological order and hadn’t gotten that far yet) which he wrote from the Adirondack Cottage Sanitarium in upstate New York.
In the letter he assured Jack that “I am not quite ready to croake yet” and details his treatments which include: raw eggs, port wine, cod liver oil and twice daily cigarettes/pipes (Yay Victorian medicine!).
He ends the letter “Tell Rachel I am still on deck if she thinks I am going to throw up the sponge.”
Your guess is as good as mine on that one as to whether he’s referring to himself still being alive or something else entirely.