I'll have to read the detailed summary at some point when I hurt a little less.
Here's the light version with the villain.
About halfway through the game, or perhaps a little past halfway, the heroes have been using a fixed location to jump to different eras. Rather than gates that simply connect two eras, it's one fixed gate that can open to any predetermined gate.
Eventually the party realizes that the spatial anomaly will not allow them to visit any time they wish, so they decide to build a time machine so they can freely travel at will and stop the big bad once and for all. They build the time machine, but it malfunctions, and the hero is caught in the explosion. His consciousness is pulled from his body and absorbed into the spatial anomaly, and it is revealed that he literally becomes/became the time anomaly that the party has been using to time travel. He has been guiding his younger self to this moment.
His body, meanwhile, is left without a consciousness and is thrown into the far future, where it is an amnesiac and grows to become leader of an advanced society in that era. He gradually begins to gain flashes of memory.
Now, if you're still reading, here's the kicker...
When the main hero first meets the villain, the villain attacks the hero with fury, claiming it is out of revenge. The main hero is confused, as he has never met the villain before. This, in the hero's mind, paints the villain as just that - the villain.
Later in the story, in another era, the hero and villain run into each other again. This time, the hero strikes first as a precaution. The villain is completely off guard, revealing he has never met the hero before. This, in turn, causes the villain to believe our hero is a villain.
Thus, we realize that the two are both time travelers and their meetings are not aligned; their perspectives do not align. The first time, in the hero's timeline, he meets the villain is actually the second time they've met from the villain's timeline.
Makes sense?