As to the swallow whole question, I would still figure that the character is grappled but even if he isn't drawing a dagger means that he'll attack once--and it's pretty hard to do 20-25 points of damage in one attack with a dagger (especially since you can no longer benefit from power attack with light weapons). It's a lot easier to do that much damage in a full attack with a highly magical shortsword (or other light weapon for TWF) with which you're specialized.
As to Scion's contentions, it's significant to note that he's trying to have his THF both ways:
They have better attacks because they have more money sunk into their weapon.
AND they have better defense because they have more money free for armor (including an animated shield). I would think that my analysis above demonstrated that they can EITHER have a slightly better weapon OR have a good AC with the animated shield, but that the added cost of animating a shield precludes having BOTH superior attacks and a superior AC. If the THF character buys a good animated shield and the TWF character chooses to ignore the option of buying a shield, the TWF character will actually have better weaponry. (Oh, and incidentally, two +1 wounding shortswords cost a mere 36,620 gp so one shouldn't discount the benefit that TWF can draw from specific equipment at relatively low levels--and two spellstoring swords (16,620gp) would be potentially quite nasty as well (two Inflict Serious Wounds, Empowered Magic Missiles, or Searing Lights (esp nasty against vampires per combat)).
As to the rest, two weapon fighting is NOT a "Role Playing" choice unless taking Greater Weapon Specialization is also a role playing choice. Role playing choices are being heroic or cowardly, chaste or slutty, etc. Two Weapon Fighting or any other fighting style is a combat style choice. There's nothing particularly "flavorful" about fighting with two weapons (unless it's that 2e munchkin flavor you're going for)--at least no more than there is about any other weapon style.
My own take on the breakdown of combat styles, FWIW, is as follows:
THF: Very offensively focussed. Big damage but generally quite vulnerable.
S&S: Defensively focussed. Lower damage (although it can be reasonably high) but generally less vulnerable.
TWF: Flexible: Can be almost as offensively focussed as THF (and is potentially slightly more damaging if using a double weapon) or as defensively focussed as sword and shield (heck, it can be done with a sword and shield) and can switch between offensive and defensive focusses on a round by round basis.
And as to powerful reasons why TWF should take more than one feat. Two words: Sneak Attack.
