In my opinion , the story is an illusive story and has a deeper meaning that hides behind the words and symbols that Joyce uses.
The boy ,whose dear friend is in fact a 65 years old preist named father Flynn, sensed in a way that something was inappropriate, that there was something wrong with their relationship. He`s feelings about the preist are ambivalent. He feels close to the preist due to the fact that they spent time together and father flynn taught him a lot of things. On the other hand, he feels some sort of a relief when the preist dies of paralysis.
He says that the preist made him feel uncomfortable with he`s tongue lying on the lower lip (insinuates something sexual).
He is angry of himself for not feeling a sensation of mourning ,and the only sensation he feels is that he had been freed from something by his death (maybe the uncomfortable feeling).
He has already distanced himself from the preist by referring to the body as "it", and sees the dead preist in his dream trying to confess about something with a smile and moist lips with spittle (again , sexual).
When I think about it I understand that maybe the paralysis of the preist represents the paralysis of the catholic church in ireland.
In addition, there is the chalice which is a very symbolic item since it represents the most important vessel in the catholic church and according to it, holds the blood of christ.
The broken chalice ,as said by Flynn`s sister , Eliza , is the beginning of it all (the illness and death). The beginning of madness too (as we see in the last paragraph).
Why was father Flynn so nervous about breaking the chalice? What did the chalice symbolized to him? Was it guilt? Maybe with the breaking of the chalice he broke he`s vows? Or at least understood that he did in the past.
There is no doubt that the chalice plays a significant part in the story due to it`s major symbolism and the fact that breaking it was the beginning of the end for father Flynn.