So. . .the MitD has Miracle or Wish as a spell-like ability?
I do like the "Avatar of the Snarl" theory, and it fits pretty much all the info we have on hand, but knowing Rich's talent for evading expectations it probably won't be that.
The idea of some homebrew Epic Abomination of some idea is a good one, which could account for nigh-Godlike power.
Predictions that this will lead to some kind of Dungeon Crawl are confirmed since Xykon did have it warded against scrying.
So, V's attempt to kill Xykon did accomplish something, it apparently rescued O'Chul and did make Xykon lose his phylactery and have to try to search for it. It just might have taught V a lesson in humility or the limits of magic, just maybe (then again, a magical Deus Ex Machina just saved his rear).