I have an idea of what might have happened to the Dragon Commander, one which fits with the established lore, but I'm going to save it for my LP. I don't think the universe requires that the Dragon Commander be dead in Original Sin. It's a big world. There were no Dragon Knights mentioned in Divine Divinity.
I think that the Dragon Commander's empire didn't last forever, and that once it dissolved, with the Demon Tech long since destroyed, the Dragon Commander wasn't inclined to start a massive war to retain an iron grip on the entire world. They'd probably had enough politics for even a Dragon Commander's lifetime.
