Yes, Damian certainly could have tried to stop the dragon knight, I just don't see a huge difference between not having an attempt and coming up with a way for Damian to fail.
There was certainly room for a little more polish, if Larian had had the time and resources. The thing about the ending that stuck out more for me was in Ygerna's memory, when you are talking to the Divine and Zandalor and trying to stop the execution, you basically jump straight to a violent resolution. Even if it led to the exact same fight, there could have been an option to try to reason with them, and convince them they were simply Ygerna's memories (at which point they could stop behaving as Ygerna remembered them, and start acting as an extension of her will). The right dialog options might even have allowed the player to realize it was Ygerna guiding them to that point, rather than Talana. Of course, as you said, thinking of this stuff after playing the game is easier than when trying to finish it with a ton of stuff left to do and things being cut, etc.
I rarely had a problem with the time healing potions take to work. You can use a healing and rejuvenation potion one after the other, as well as the healing spell. The instant potion healing in Divine Divinity could make any fight trivial with enough restoration potions (checking my stats without equipment at the end of the game, I went and regought the Demon of Lies; it took 106 minor restoration potions and a couple minutes, but I killed him barehanded, with no armour).
The couple times with my ranger that I ran into a problem with Stun Arrows (not investing in Intelligence at all) I solved with a change of strategy on one case, and an Intelligence / armour potion before a fight and a couple healing potions during the fight. Other than that I didn't have a problem getting stunned. It wasn't an issue with my warrior character, either, though that was in the original release of D2:ED.
