So obviously this forum is dead, but I felt like recording my theory here - though everything I have to say has probably been thought of before
I think it's pretty accepted that Rhue was Venge, who turned on his father. Venge is a half-demon half-human, thus he has human appearance, and a soul and an aura. However, I believe that as a result of the conflict of Janwen, Venge lost his aura and became the so-called Mimic - a shell that can only absorb the auras of others. In the normal ending the Phantom Slasher calls Rhue an anomaly that cannot even form its own memories - this is because Rhue/Mimic has no true identity after the events of Janwen, only the identities of those whose auras he absorbs.
1. The monster we encounter at the end of the Reaches ending has an attack called End of the Way. I believe that this attack resembles the "final blast" that the Lord Below unleashed against the Illuminati.
2. I wonder why Venge fought his father. I'd like to think it was because he loved a human, and sometimes I tell myself this human might be The Girl, but there is really no evidence in the story that goes either way. The Girl's significance in the story is interesting; she is implied to be some sort of romantic interest of one of the Mimic's personalities, as illustrated by the painting of a broken heart, the dates you go with her, etc., but we are given very little to go by here.
Moving on, The Mimic eventually finds the Phantom Slasher somehow (possibly after he kills Jeruh). The PS has the ability to absorb auras independently of Rhue, and perhaps has some control on which aura inside Rhue is currently dominant (alternatively, it "staves off" the auras that Rhue absorbs by absorbing parts of them itself, so that they do not take over the dominant personality). However it is not responsible for "Dream Estrana"; Dream Estrana exists inside the Mimic as a result to fill the void that has been created by his lack of an aura. Note that no other Shadow Sword user is implied to have this multiple personality disorder (other than when they are being manipulated by their swords, which is a separate process). Rhue is plunged into it as a result of interacting with Gaius' sword, which seems to access the auras of those it comes in contact with, in some way. Then he vies for control over his body with the Phantom Slasher in some way.
As "Kava", Rhue eventually became the Paraphalyn, undefeated and known for his unique finisher move. Of course this Paraphalyn became more of an urban legend lost in the pages of time, as Rhue eventually switched to a different aura.
The rest is history.