The BACF Embraer order has nothing to do with the current strategy for domestics from either LHR or LGW. CF have ordered 11 aircraft (split between 170s and 190s) which are one-for-one replacements of the current Avro RJ100s. Given BACF's penchant for leasing in aircraft without any regard to cost, any growth above 11 aircraft would be firstly used to avoid the need for wet-leases. However, it certainly does not afford any room within the fleet for BACF to be taking over domestic services from BA into either of the other London airports.
Now where exactly the BA domestics to LGW end up is another question all together. They seem to have a nasty habit of putting the worst possible schedules onto the domestic routes and then wondering why they perform badly. Not exactly rocket science, but this has already seen the death of the NCL-LGW route and will yet see other domestic routes to LGW killed off to the benefit of competitors who do understand how to make these routes work.