I agree with you completely.
I really feel like Act 3 had much more planned in it than we got. Not that it is bad, not at all, but if you go looking, you can definitely see some cracks here and there.
And this is the biggest one to be honest. It's one of the only times where there is no way to have both sides. Going back to Ethel, you can have her join you in the final battle, even if you go and kill her in the first act. You still have the opportunity to side with her in the end.
I really feel like they wanted to make The Emperor a companion in some form, due to how many similarities he has with other companions. For example, other than the brothel, he is kind of the only character you can romance outside of the player's camp.
He also reacts to the player's actions and his dialogue changes depending on how the player treats him. If you treat him as more than just a mind flayer, he really opens up to you and trusts you, and if you don't, he just remains cold towards you.
But at the end, it feels like he just goes into robot mode, as if nothing they have previously done mattered.
