Problem solved:
Knowing what's coming up, I first went to High Hall to get the portal activated there. Then I went to the Dragon Cliff and got the Chalice quest. Finally, when I went to confront Tilian, there was now a 3rd option that I had never seen before. I'm not sure whether it was the new patch that put it there or the sequence of events I chose this time:
Speaking with Tilian:
3. My Dragon Slayer days are over, my good man. Or at least, the Slayer part.
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1. I am now the last Dragon Knight, and I'm here to claim the Chalice!
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1. Just hand it over, or feel my wrath!
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Taking this route, you don't even have to mindread him. He'll attack you and you get to whoop him along with several of his elite Slayers. He drops the key to the chest the Chalice is in, and the guard drops the key to the portal that takes you to Penitence to rescue Saul. Plus a ton of extra exp.

This is the ending I was looking for. Even Talana was pleased with me smile

I'd like to close by quoting Bellegar's famous last rhyme:

"Cursed be the mother that bred thee!
The wench must have been a hell-spawned banshee!"