Letho beating Geralt is one thing and somewhat acceptable in terms of story (even though I pretty much always dislike forced failures like this), him "sparing Geralt's life" and even gloating about it afterwards is just terrible. I would've been fine with two different cutscenes for different outcomes: If Letho kicks your ass, you get the current one. If you kick Letho's ass, he barely escapes collapsing a passage with Aard or something, maybe mentioning something about Triss before hastily leaving the scene. It would've still been railroading and kind of cheap, but at least they wouldn't have kicked the player on the balls the way they did, and they could've just rolled with the current plot that they had. Alternatively they could've just had Geralt take part (or remain neutral) in the fight above ground with Roche and the Scoia'tael and let Letho escape in the middle of the chaos, which would've required some minor changes to the next portion of the main quest but nothing too drastic.
edit: Better yet, they could've made Geralt fight Serrit or Auckes (or some third guy) instead and have him spill the beans on Letho's whereabouts. It's not like Geralt has to have a face-to-face meeting with the Kingslayer at this point of the game.
Also a very valid suggestion.
Meanwhile, I got to act3 and I lost all wind. I dunno, the fact that I know this is the end of the game, the fact that I know this chapter is really short, the fact that the settings is utter crap (I really don't like this ruined city setting), the fact that in the whole game there hasn't been any major city environment (which I personally love, EG Vizima in W1, or the whole first part of NWN, all the stuff one could do without even leaving town in Gothic 1, Gothic 2, Risen, etc)... Whereas I've played act 1 and 2 as a completionist, I'm now tempted to go straight for the grand finale and skip everything else, not even sure I'll bother crafting the third Dark armour set.
As I approach the end of this playthrough, I realize I need to change my stance about TW2 a bit. While I used to like it a lot, this playthrough, with the complicity of Dark mode, has put me face to face with its shortcomings. In all honesty, I must admit that 80% of my love for the game comes from the settings, I am just really fond of the world of the Witcher, and just crave to see more of it. The game is visually beautiful and believable while retaining vivid and bright colours, the story is compelling enough despite being railroaded, there are some original ideas here and there but, I can't lie, the game really sucks as an RPG. Gameplay-wise, it's really no more than an action game (and a mediocre one at that) with talents, and few plot choices, and whores.