There is no pun, only a remark about Françoise's mannered pronunciation of lionlion.
What is unflattering is not her pronunciation but the comparison she makes, and it is unflattering for the men she refers to, the soldiers marching in Combray.
C’est pourtant vrai qu’ils n’y tiennent pas ! Je les ai vus en 70 ; ils n’ont plus peur de la mort, dans ces misérables guerres ; c’est ni plus ni moins des fous ; et puis ils ne valent plus la corde pour les pendre, ce n’est pas des hommes, c’est des lions.
In her mind, to say that a man is a lion is unflattering because a lion is fierce, lacks humanity, and does not value life. The narrator must explain that this comparison is unflattering because usually such a comparison is positive: a lion is strong and powerful.