There are a few people who know what the dragon knight was up to (Zandalor in particular), and would at least realize something was wrong when Damian and Ygerna showed up and started destroying stuff. Lucian was believed dead, so no one would have thought to look for him.
It is also possible that the dragon knight and Divine could pool their talents, and find a way to escape. I'd think outside help was more likely, though, and Zandalor's buddy from the ministry is good with searching other realms / dimensions.
As for Divinity 3, I don't think people would refuse to believe Lucian was the Divine One, but he would probably need to loose his powers if he was the main character (to make it easier to balance / design the game, and allow for a different skill system, etc). An illusionist could take care of the character customization.
He may be relegated to support staff (like Zandalor), perhaps using all his powers to counter Damian, while the player characters goes off on a quest to tip the balance of power.
An interesting premise would be to re-assemble the council of seven again. The player could track down the remaining elves, dwarves, etc, who were either in hiding, or escaped Rivellon with the help of rebel Raanaar, or something.
