I've been reading through a lot of these posts, and I probably missed something, but when most people assess how "Rhue" came to be Rhue, they forget at least one piece of information, found in Episode two. So here's how I put it together:
After Jeruh killed Serena and knocked Midian into the river, he immediately through away the sword and changed his name to "Rhue" (and from Sorya's remarks in Ep. 6, the dropping of the 'J' represented the hiding of something in his past, meaning he dropped the killing of Serena from his memory).
Midian, who swore vengance, began looking for Jeruh, asking around for him. Eventually, he came across the man in blue, who killed him for whatever reason, and absorbed his aura, essentially becoming him and searching for Jeruh. Along this time he came across a headhunter (from episode 2, the Marna stretch) and withing another week, he met Gaius, who teamed up with him until they found Jeruh. "Midian" ran after Jeruh, who naturally ran away, cornered him, and killed him. Gaius buried the body and "Midian" absorbed Jeruh's aura, but became who Jeruh was pretending to be.
The rest is history. Once again I apoligize if this has already been brought up.