We present detailed first-principles density functional theory-based studies on RbRE2Fe4As4O2 (RE = Sm, Tb, Dy, Ho) hybrid 12442-type iron-based superconducting compounds with particular emphasis on competing magnetic interactions and their effect on possible magneto-structural coupling and electronic structure. The stripe antiferromagnetic (sAFM) pattern across the xy plane emerges as the most favorable spin configuration for all the four compounds, with close competition among the different magnetic orders along the z-axis. The structural parameters, including arsenic heights, Fe-As-Fe angle, and other relevant factors that influence superconducting Tc and properties, closely match the experimental values in stripe antiferromagnetic arrangement of Fe spins. Geometry optimization with inclusion of explicit magnetic ordering predicts a spin–lattice coupling for all the four compounds, where a weak magneto–structural transition, a tetragonal-to-orthorhombic structural transition, takes place in the relaxed stripe antiferromagnetic spin configuration. Absence of any experimental evidence of such structural transition is possibly an indication of nematic transition in RE-12442 compounds. As a result of structural distortion, the lattice contracts (expands) along the direction with parallel (anti-parallel) alignment of Fe spins. Introduction of stripe antiferromagnetic order in Fe sub-lattice reconstructs the low-energy band structure, which results in significantly reduced number of bands crossing the Fermi level. Moreover, the dispersion of bands and their orbital characteristics also are severely modified in the stripe antiferromagnetic phase similar to BaFe2As2. Calculations of exchange parameters were performed for all the four compounds. Exchange coupling along the anti-parallel alignment of Fe spins J1a is larger than that for the parallel aligned spins J1b. A crossover between the super-exchange-driven in-plane next-nearest-neighbor exchange coupling J2 and in-plane exchange coupling J1a due to lanthanide substitution was found. A large super-exchange-driven next-nearest-neighbor exchange interaction is justified using the construction of 32 maximally localized Wannier functions, where the nearest-neighbor Fe-As hopping amplitudes were found to be larger than the nearest- and the next-nearest-neighbor Fe-Fe hopping amplitudes. We compare the hopping parameters in the stripe antiferromagnetic pattern with non-magnetic configuration, and increased hopping amplitude was found along the anti-parallel spin alignment with more majority-spin electrons in Fe dxz and dxy but not in Fe dyz. On the other hand, the hopping amplitudes are increased in stripe antiferromagnetic phase along the parallel spin alignment with more majority-spin electrons in only Fe dyz. This difference in hopping amplitudes in the stripe antiferromagnetic order enables more isotropic hopping.