but when the scope has already been set to extreme insanity, prior to the events of this game, it's kinda hard to then slam on the breaks and not continue with the insanity.
Not quite. It would be a perfect time for a pause, if they did desire. Like a DM, you can tell the story that you want. Many gamers don't know BG1 or 2 story and even fewer will know FR lore, Larian had a full blank page to do whatever they wanted (and indeed they claimed that).
And think about it. BG1 and 2 were about a demi-god striving to either embrace or reject his/her demi-god heritage. In the end, they had a choice whether to become a god/goddess or not.
Not exactly, as you don't know that for much of BG1, and, in BG2, you are trying to retrieve your soul.
Bioware could have done the Time of Troubles and had every deity in the game, but instead, Bhaal is in the background and what you actually see in the game is the conflict between Bhaalspawns. And again there is the Iron Shortage and other subplots fleshed out in the worldbuilding that make you care about the world you are in.