I pretty much read the whole thing this way too.
I think Woedica and Thaos would have aligned rather quickly as they both represent the order and control that would be needed to perpetuate the fabrication of the the engwithan gods. Not surprisingly that very order and control stifled not only the kith but the gods aswell. Animancy was forgotten but also innovation and divergent thought would have been stamped out. Quite the atithesis of gods like Galawain, Magran, Hylea and Abydon. I can imagine they got rid of Woedica pretty sharpish so as to guide the kith their way. Much to Woedica's and Thaos chargrin. Which would lead us to the Saints War and Waidwens Legacy.
Under the auspice of a more progressive pantheon, the kith have begun to rediscover animancy, a huge threat to Thaos duty as keeper of the secret behind the engwithan "gods" and a threat to Woedica's sense of innate exclusive godhood.
Cue the plot to re-instate Woedica, under whom Thaos duty would be more readily executed. Now beaing in mind I doubt Thaos or Woedica are much concerned with the other gods knowing what they are doing as they are "playing by the rules" so to speak. The other gods must sit back and try to play puppet master to avert Woedicas return to dominace but suddenly, Eothas, kindly benevolent god that he is, foresees the suffereing Thaos plan will result in and takes unexpected action, abanding the game of zero direct influence, takes a mortal avatar and moves to prevent Thaos plans (ofcourse I'm only guessing here, could be he was just nuts or Waidwen was not a god at all but I think it just feels right for Waidwen to actually be Eothas) Suddenly, by the rules that govern the gods Magran and the other gods MUST intervene against Eothas, regardless of his intent and what they themselves might loose in the process. Enter stage left - the Godhammer. All the while, under the cloak of turmoil Thaos continues with his plan, starts up the Engwithan soul hoovers and prepares to restore Woedica and at the same time, pin the legacy on animancy. Plan perfectly executed, until the player turns up at Cilant Lis.