Seems like I joined the forum just about the right time, because many of the questions discussed here are precisely what I've been asking myself for years ;) .
The main one being: Is Damian actually dead now?
Because essentially, everything you do in Ego Draconis is commit one giant mistake, and then everything you do in Flames of Vengeance is rectifying that mistake - in other words, you don't accomplish anything. That is, unless the thing about the soulbond between Ygerna and Damian is true: Reviving her may not have killed Damian at the end of Ego Draconis. But if their souls are merged, then you killing Ygerna at the end of FoV should by proxy also kill Damian.
However, it's strange then that we don't even get to see a short cutscene of him dying... :/
And if Damian isn't dead, then we truly haven't accomplished anything. We would have been better off just delivering the coup de grace to Talana when we first met her at Bellegar's shrine - which, even more ironically, was our original task as a dragonslayer!
The reason I'm a little obsessed about the mechanical replay value of DKS (like getting maximum value out of all the quests etc.), is partly because the story-wise replay value is equal to zero: Nothing you do has any influence on any of the major plot points of the game. And while that by itself is true for many games, in DKS it's especially annoying because: All the time you're re-playing Ego Draconis, you effectively know you're doing something horribly stupid. And all the time while playing FoV, you know you're just cleaning up your own mess and won't even get to fight Damian at the end.
Also, I don't see how the ending of Ego Draconis was necessary in the first place - not even to help selling FoV. They could just as well have stuck to the "Damian dies, Ygerna lives" premise. After all, you only fight Ygerna in FoV anyway, right? So it would have sufficed to tell the player: "Well, you've dealt with one problem (Damian), but now you've got another one (Ygerna)!"
Somehow implying that Ygerna was even worse than Damian, and that the player should have seen it coming. After all, she was the one who initiated Damian into the Black Ring, so it makes sense for her to be more powerful, and also more "evil", while Damian just turned evil by falling in love with her.
Doesn't that even sound much more plausible than Ygerna somehow orchestrating all this despite being... you know... dead?
I don't see how it was necessary to make the player feel like a complete fool just for having enjoyed the game so far?
It really just seems like a plot twist for plot twist's sake, which smacks you in the face the first time you play, but at the cost of depreciating the replay experience severely.