I had a thought: Something was said that has two possible interpretations, one of which isn't mentioned in the first post.

Xykon says "There's nothing in there any scarier than you. Correction, any scarier than you SHOULD be".

What if that's not just a jab at his lack of killer instinct?

What if it's a comment about him having a misleading CR? That is, he's not as scary as his CR would let on?

There are more than a few critters with wildly inappropriate listed CRs, especially if templates get in the mix (I still favor a lightly templated Efreet for MitD -- the Efreet's wish granting ability fits far too well for the "hard parts" of explaining MitD).

For example, a Pseudonatural Efreet would be CR21 but V could probably kill it single handed, with a bit of luck and going in prepared. Throw Paragon on that and it's CR 36, and incredibly nasty but nowhere near what a CR36 creature should be capable of.