Though keyholes are reputed to be just about the most peaceful cichlid in the hobby this does not mean they will not defend their territory or be completely unaggressive. It only means they are albeit to a much lesser degree, though each fish varies in personality and you can get generally peaceful keyholes and those that may be comparibly more aggressive.
The fact that the keyholes are attempting to spawn is a good indicator as to why they are exhibiting such aggression. Any fish will be much less aggressive when it is not in spawning mode.
Flaring when the jewel came to the keyhole is simply defensive territory. Initiating challenging, flaring, wagging and biting (like the jewel did) is aggression or shows of aggression brought on by breeding, battles over dominance or claiming of territory. It's natural in all cichlids from the largest peacock bass or emperor cichlid to the smallest Apistogramma or shelldweller to even the more "delicate" species like angels, discus and other sensitive or fragile looking cichlids.
Nothing wrong with your keyhole. *thumbsups
