More simply astounding stuff, Destan. I mean, really, what a great update. Such wonderful presentations of things like an entangle spell, a ranger's use of the Wilderness Lore (now Survival) skill and a Paladin's mount are what truly make this a joy to read.
I've said it before, and I'll say it again: your writing is a constant reminder to me of everything that made me fall in love with D&D in the first place.
Only criticism from this most recent entry: The -I'm Sorry, Baden. statement is difficult to decipher in context. Is this meant to be the child in Baden's mind, speaking? It's not clear, and potentially interupts the flow while the reader needs to decode it. If it's someone else speaking, it needs to be called out...if it is the child-voice, it should be made more clear. Perhaps a quick mental reply by Baden to make it clear? If it is the girl, it should be more significant or not present, as it potentially brings the reader out of the situation...and if it is the girl, her noted silence elsewhere becomes a question, as well. Just food for thought.
As for the high-level stuff, I definitely feel your pain. Like you, I didn't originally know if our game would go more than a few sessions. We started with Sunless Citadel, since that seemed to be the place to start, having been away from D&D for so long (we skipped 2e). I struggled long and hard with how to deal with the higher-levels, and the differing power-levels that it presents. Piratecat certainly gave some guidance, there, as did the patience of my players. 11th level was a turning point, I think. Now we're in the Epic levels, and the process has repeated. It's hard to believe that that simple band who set out to retrieve a magical fruit from some goblins is the same group who is now trying to defeat the Githyanki queen in her own palace on the Astral. I look forward to seeing how the Brothers of Olgotha develop, as well.
As for your story concerns, I think you've gotten plenty of advice, and should stay the course. Sometimes it's very difficult to emphasize all of the characters throughout a story hour, and you'll sometimes need to decide whether or not to emphasize one aspect (the story) over another (the record). Zad struggles with this constantly, as even as big as our story hour is, there is still plenty of content that isn't captured there, such as anything to do with the mage guild, lucid dreaming or shadowdancers.
And don't worry about the Story Hour having to take a back-seat to the supplement work: your readers will still be here. Sep and PC's readers have gone months without updates, on occasion. Your readers have just been spoiled, that's all.