After you talk to Patriarch, Damian mentions something about listening to your conversation since the dragon refused to help him, and calls you a pawn, etc.
I assume the various underlings ordered to take care of you were a test. If they could succeed you were not strong enough to be of any use. He didn't have to know you would become powerful enough to reach the hall of echoes; being the last dragon knight, you were pretty much his only chance of getting the dragon to open the way.
I would guess the soul forge (which Damian performed moments after her execution) is what allowed Ygerna to keep her memories and reach back into Rivellon. Presumably anyone can get stronger in the hall of echoes (Lady Kara and Lord John went from level 21 in the bunker at the start of the fjords to level 31 in the arena), but I assume the trick is keeping your memories long enough to be able to do something more than hang around to get revenge on the person who sent you there.
