I agree with what you said about Zargabaath being sensible ect. Hes not blindly loyal, yet knows (unlink Drace) when to hold his tounge.

The only difference is that Drace couldn't hold her toungue and openly went against Vayne in a moment of outrage.
I'll just point out that this wasn't the only time she openly vioced her reservations about Vayne. When speaking to Bergen (i belive it was the first scene that we saw Drace in), she does not hide her doubts. Even Zargabaath knew that this was unwise, and subtly tries to hush her towards the end of the scene.

He reminds me of the old-school honorable villains like Rubicant or (forgive the Star Wars allusion) Captain Needa.
I hadn't noticed the connection, but, in a way, its quite true. To be honest, i never really saw Zargabaath as much of a villan. But mabye that was because he was voiced by Simon Templeman, who is prehaps one of my favorite voice actors of all time. In Legacy of Kain, he played the Bastered of a character, Kain, and i always expected him to do somthing really evil, but it never came, so in my mind he may as well have been a goodie.

A prequal based around the judges would be pretty similar to FFVII: BC, but instead of the turks, it would be centered around the Judge Magisters. SE should totally make this game.