I thought the ending fit the story perfectly. The warrior ends up above the Dark Council, second only to the Emperor. I don't see how "going and fighting the Republic" would improve on that. And if you bother to go to Ilum and do the quest line there, you will get the chance to threaten and even Force choke (with no Dark side points) a Moff in true Vader fashion.
As far as what the Jedi killed, way to not use the spoiler tag, but we don't really know if The Hand was telling the truth or not. Just because Baras said something doesn't mean that it's automatically a lie.
Warrior does not end up above Dark Council.